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In Dubai, the Jumeirah group’s present portfolio includes many multi-hotel complexes such as Jumeirah Bab Al Shams Desert Resort & Spa, Mandinat Jumeirah, Jumeirah Beach Club Resort & Spa, Jumeirah Emirates Towers and the Jumeirah Beach Hotel. At the same time, it is also negotiating to operate new resorts and hotel contracts in big cities like Shanghai, Hong Kong, Milan and Beijing. The company is operating in order to achieve its vision that “to become a world class international hospitality and hotel company and also committed to being the leader of the industry in all operating activities through the process of dedication to their colleagues and customers (About Jumeirah Group).

The Jumeirah group also has been a member of Dubai Holding since the duration of year 2004 under the leadership of CEO Gerald Lawless. The company’s achievement can be estimated by the data that in the year of 2006, the revenues were recorded more than $1 billion (About Jumeirah Group).

The project would help us to analysis a company’s resources and its competitive position in the world. This will aim to get deep understanding of its current strategy and to create a strategy which would be more effective as per the current scenario. This would be helpful to gain insights about the flaws and their solutions of the company as per the current scenario and current strategy. The study would analysis strength, weakness, opportunities and threats and eventually the proposed alternative can be adopted to enhance the current situation of the company.

Company Background:

The Jumeirah group was founded in Dubai in the year of 1997, owned by ruling Al Maktoum family with the Gerald Lawless, with an aim of becoming a global hospitality leader. After ten years of development the company has been realized with the group’s portfolio that has been regarded as among the most innovative and luxurious globally (Corporate Responsibility Report 2008). The brand of the Jumeirah group can be summarized as

A global brand having name synonyms of Luxury.

A brand having professional team of experts and professionals having wide experience in entire aspects of hotel management that handles the functions from development phase to the daily operations.

A strong distribution system with the help of more than ten sales offices in major locations of the world.

A strong emphasis on an adapting approach to the owner (Corporate Responsibility Report 2008).

The Jumeirah branched from the strength of Dubai’s ruling Maktoum family in order to develop the UAE member into one of the regions as well as in the world’s top tourism destinations. In the early period of the year 1990s, Sheikh Mohammed al Maktoum commissioned a new project for the hotel which was supposed to build on land that reclaimed from the sea in the Dubai port, called the Burj Al Arab (Corporate Responsibility Report 2008). However the first three year of the project were held in the land reclamation phase that lead to the launched of the construction by the year 1997. At the same time, Al Maktoum joined with the Gerald Lawless who was an Irish native had more than twenty year of work experience in the hotel industry and had fifteen year of experience as a head of the Forte hotel group in Dubai only. After join with the Lawless, Al Maktoum had begun to start others hotel projects for the wide market of Dubai such as Jumeirah Beach Hotel. In addition to the hotels and restaurants, Maktoum developed Water Park and theme park also (Corporate Responsibility Report 2008).

Hallmarks:

The company’s vision is to become a world class luxury international hotel management company that committed to the industry leader in all the operational activities through the medium of the dedication to colleagues, customers, stake holders, owners and business partners (Jumeirah Guiding Principles & Vision).

The company’s Hallmarks considered as the reason of their success in the past as well as guidelines for the future. The Hallmarks are seems to reflects in design of inspiration and would remain in the core of operating philosophy along with the new adopted philosophy of “Stay Different’. In Jumeirah culture their guiding principles plays a major role which are supposed to be consider as foundation of the business and strength of their culture (Jumeirah Guiding Principles & Vision). They are:

Integrity :Honesty and Sincerity

Teamwork: win-win attitude and mutual support

Recognition: Success are supported and recognized

Innovation: Implementation of new idea’s

Continuous Growth: Positive Environment

People Focus: Focus on individual as colleagues, business associates and customers.

Stay Different : provides unique experience to the customers (Jumeirah Guiding Principles & Vision)

Strategic Objective:

The Jumeirah group strategic objective is to fulfill their vision and mission through the commitment of resources to learning and innovation. Through the Business Management System the company is delivering benefits to the business partners, customers, colleagues, society and owners by developing mutually beneficial relationships, listening and building loyalty. In order to fulfill the company’s vision, the Jumeirah strategic approach is summarized in the four key components. They are

Engaging stake holders in order to understand their expectations so that they can be fulfilled or expanded and value can be added.

Managing key factors of the social, environmental and economical aspects like their risk, opportunity and their impacts.

Embedding responsible business practices and standards in the business daily operations and activities.

Reporting back to the stakeholder about the progress and development of the company.

With the implementation of the above four key strategies the company is trying to be expanding and delivering services all over the world. The company is focusing on current strategy in order to fulfill their objective. The company’s current strategies inclusive of global expansion, Stay different, provide unique and different services, value to stake holders, provide luxury and comfort to the customers and implementing the process of learning and innovation (Jumeirah Guiding Principles & Vision).

Project Undertaken/ Completed:

The following are the list of projects which are undertaken or completed under the Jumeirah group are:

S. no

Name

Specification

Location

Burj Al Arab

Hotel

Dubai (Middle East)

Jumeirah Beach Hotel

Hotel

Dubai (Middle East)

Madinath Jumeirah

Three Hotels

Dubai (Middle East)

Jumeirah Zabeel Saray

Hotel & buzzing bazaar

Dubai (Middle East)

Jumeirah Creekside Hotel

Hotel(opening summer in 2012)

Dubai (Middle East)

Jumeirah Emirates Towers

Hotel, Spa, Shopping boulevard, Club and Lounge

Dubai (Middle East)

Jumeirah Living World Trade

Centre Residence

Residence

Dubai (Middle East)

Jumeirah at Etihad Towers

Hotel

Abu Dhabi (Middle East)

Jumeirah Messilah Beach

Hotel & Spa (opening spring 2012)

Kuwait (Middle East)

Jumeirah Essex House

Residence

New York (America)

Jumeirah Carlton Tower

Spa, Club, Hotel & Resort

London( Europe)

Jumeirah Lowndes Hotel

Hotel

London( Europe)

Jumeirah Frankfurt

Residence

Germany (Europe)

Jumeirah Port Soller

Hotel and Spa (opening spring 2012

Mallorca

Jumeirah Bilgah Beach Hotel

Hotel (opening spring 2012)

Europe

Grosvenor House Apartments

Residence

London

Jumeirah Grand Hotel Via Veneto

Hotel

Rome

Jumeirah Himalayas Hotel

Hotel

Shangai (Asia pacific)

Jumeirah Dhevanafushi

Island Resort

Maldives(Asia pacific)

Jumeirah Vittavel

Five star family deluxe resort

Maldives(Asia pacific)

Wild Wadi waterpark

Waterpark

Dubai (Middle East)

Talisa

Spa

Middle East

Academy of Excellence

Education

Dubai( Middle East)

(Jumeirah Hotels & Resorts)

Analyzing Current Scenario of Hospitality Industry in the UAE:

During the past decade, the UAE has witnessed with the rapid growth and changes in terms of socio-economic and demographic factors. The regions economy are not perceived as oil and gas exporter but also as major investment destinations due to growing hospitality and tourism sector as well as large scale infrastructure projects. At the same time, the expansion of the Middle East is greatly contributing in the tourism receipt in the Gulf Council Corporation countries. In current situation, the region remains an attractive destination for tourists as well as for the investors for medium to long term returns. The Jumeriah group has provided tremendous growth in the hospitality sector in Dubai and globally also.

The study aims to evaluate a company’s resources and its competitive position in the world. This analysis will be undertaken by the following described process:

Value Chain Analysis

Michael Porter’s five force Model

SWOT Analysis

Benchmarking

Competitive Strength Assessment

After analyzing on the above aspects, we will be able to determine competitive position in the world as well as would be able to create a strategy in terms of its position.

Value Chain Analysis:

The value chain approach was developed for creating and sustaining superior performance in the market. The value added concept is utilized by Jumeirah Group for sustaining competitive advantage in the arena of 21st century. The organization comprises of activities that associate together in order to enhance business value. These activities include inbound logistics, operations such as purchasing, manufacturing, financing, distribution etc. The central aim of Jumeirah Group to adopt this value chain approach is exploiting value creation with minimum possible costs (Jumeirah Group, 2008).

http://bettyfeng.files.wordpress.com/2009/08/a-value-chain-analysis1.jpg

Source: http://bettyfeng.files.wordpress.com/2009/08/a-value-chain-analysis1.jpg

By adopting the concept of value chain analysis, Jumeirah managers identify the key activities within their group and provide potential sustainable advantages to the company.

In Jumeirah Company, the value chain analysis starts with the initial stage such as inbound logistics. At this stage, planning is performed for plant scheduling, plant capacity, estimate time for fulfilling objectives. After this stage the next step is operations under which company emphasized on the quality of services, customer’s expectations, fulfilling orders and customer visit operations. The main theme of Jumeirah Group is to enhance and implement their core services in such a way so that can meet the customer’s expectations and create positive and sustainable brand image in their eyes. The company more emphasized on the development of innovative programs, current strategies and their Research and Development programs in order to support business by facilitating new openings and high quality services to their customers (Jumeirah Group, 2008).

Jumeirah Group incorporates value chain for synchronizing the flow of business operations from input to the delivery of benefits given to the customers. This flow comprises of inbound logistics, operations, outbound logistics, marketing and sales operations and at the end gets feed back from customers and resolve problems if there is any (Jumeirah Group, 2008).

Benchmarking:

Benchmarking is the process of analyzing the internal processes of organization and then identify and adapting the practices from other organization in order to considered being best for the organization. This process comprises of five stages such as operation, identification of assess, development of several alternatives, define that alternatives and at the end implementation of that alternatives. Benchmarking is the systematic tool for identifying and implementing best possible practices in the organization so that it can enhance their operations and human assets as per the today’s need. In this competitive arena for sustaining in market, it is mandatory to implement benchmarking in the organization (Jumeirah Group, 2008).

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Source: http://pipdev.com/content/images/wheel/RouteDiag.png

Jumeirah Group has been designed this exercise for enlighten participation of organization in order to achieve outstanding results. Jumeirah Group and other organizations such as Dubai Ports World, Hutchison Whampoa Ltd, are aimed to explore best methods and practices for enhancing Human Resource Management in the view of planning, empowering, training and recognizing human efforts. It is also aimed to identify the gaps between the adopted approaches and the enhancement of improvement plans so that can analyze the effects of adopted approach in the organization. This approach develops new ideas that acts significant role in the formation of future strategic plans (Jumeirah Group, 2008).

Five Force Model and Analysis:

The Michael Porter’s five force Model articulates the Competitive position modal which describes the industry analysis and business strategy development for evaluating the competitive strength and position of any business organization or Entity. This model used to analyze the market attractiveness of the industry and competition. Porters develop the five force model to analyze to these five forces to analyze the industrial competition (porter’s five forces model, 2009).

Five force model of Porters-

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Threat of new competition.

Threat of substitute products or services.

Bargaining power of customers (buyers).

Bargaining power of suppliers.

Intensity of competitive rivalry.

Threat of new competition:

This step articulates the competition in the market, new entrants, brand equity, sunk cost, customer loyalty and industrial profitability in the market for the existing industry which can be challenging for the firm. Barriers to new entry-

Customer switching cost

Distribution channel

Government Policies

Economies of scales.

2. Threat of substitute products or services-

Entry of substitute product in the market may increase the possibilities to the switching towards the new product it can be challenging for the existing product. Barriers of the substitute product or services-

Substitute product price and performance over the existing product.

Switching cost of buyer.

Quality depreciation

Product differentiation.

3. Bargaining power of buyers:

Bargaining power of the buyer may be challenging factor for the existing industry or firm such as-

Purchasing power of the buyer.

Byers face new switching costs.

Prices sensitivity of buyer.

Buyers are concentrated

Industrial product diversity.

4. Bargaining power of suppliers:

Suppliers for any particular firm like supplies of raw material, components and labors can switch the firms due to the bargaining power scubas-

Buyers is not the customer to the.

Distribution channels.

Supplier concentration

Supplier switching cost.

Supplier completion to the other firms.

Intensity of competitive rivalry-

Competitive rivalry can be the challenging factor for the existing firm some factors are-

Different competitive strategies

Promotional tools

Competitive advantage to the other industries.

From the Porters five force model we analyze the Jumeirah group world class portfolio of resorts and hotels (Corporate Responsibility Report 2008).

Threat of new competition- As we analyze the competitors of the Jumeirah Group these are the competitors of the Jumeirah Group-

Hyatt Hotels Corporation

Fairmont Raffles Hotels International Inc.

Four seasons Holdings Inc.

Jumeirah Group has the partnership with the UAE government, Dubai Department of Tourism and Commerce Marketing (DTCM) in association with Tanmia (The National Human

Resource Development and Employment Authority

2) Threat of substitute products or services-

Jumeirah Group has a strong product and services portfolio in the luxury hospitality sector including world class hotels and resorts.

In the hotels and resorts category the products of Jumeirah-

Burj Al Arab

Jumeirah Beach Hotels

Jumeirah emirates tower

Jumeirah Zabeel Sara.y

Pera palace Hotel.

In the services sectors-

Includes of services of Jumeirah Living

Jumeirah Restaurants,

Wild Wadi Waterpark,

Talise and The Emirates Academy of Hospitality management.

Jumeirah group is offering the best services and performance over its competitors. They have brand loyalty and offering the qualitative services to its customers and Jumeirah group have different product strategies to compete with the competitors

3) Bargaining power of customers (buyers)-

Jumeirah group’s customers can be classified on the bases of several categories- hotel guest, clients, bulk room purchaser, customer’s book room for events and conferences and partner such as tour operators and airlines.

Jumeirah Group has strong commitment towards its customer. Customer value feedback for the Jumeirah group is-

Personalized products and services delivering high quality.

Favorable impact on the community.

Group offers the customer health, safety and security services.

Customer privacy and information security service.

Customer satisfaction result of the Jumeirah group is for the year 2008 is 81.265 which show the customer loyalty to the group over its competitors.

4) Bargaining power of suppliers-

As we analyze the supplier chain of the Jumeirah group has strong corporate buying policies with its supplier’s provision of high quality and good products and services. The Group follows the principles-

Stability in the dealings with the suppliers

Provide equal and same opportunities to the all suppliers

Consistent delivery of services such as health, safety and legal aspects.

Transparency in the system.

Best distribution channels such as advertising for its services offering.

Intensity of competitive rivalry-

Jumeirah Group has the different competitive strategies over its competitors.

They promote their products and services by different promotional tools such as by advertising, Sales promotion and by the different occasion.

SWOT Analysis:

Dubai is the fast emerging player in the worldwide along with the China and South East Asia. Dubai attracts the attention of business and corporations across the world through its infrastructural art and cosmopolitan culture. Along with the real estates and financial sectors, petroleum and tourism, it is also known for its exotic resort and hotels. Jumeirah Group is the main player in the hotel and resort industry (Jumeirah Group, 2008). This group has certain strengths, weaknesses, opportunities and threats which are as follows:

Strength:

The art of infrastructure with the surplus of international convention centers added value to the Jumeirah Group.

The cosmopolitan culture in UAE gives rise to the Jumeirah Group in the hotel industry which becomes strength of this group.

Crime rates are low in UAE as compared to the other nations which facilitate economic support and social support to the company.

Middle East is the epicenter of trade that comprises of various standard businesses and corporations which gives hike to the hotel and resort industry.

In Dubai, government has pro- active authorities that give aid to the company in order to control situations rather than just responding to it.

Jumeirah Group has been linked with other nations in the world wide.

Special travelling packages are the additional advantages to t he company. It offers several packages according to each living standard so that easily can be reach.

Jumeirah Group is strategically placed in Dubai, which is situated between Asia and Europe while it is also closure to the Africa so there is probability that several tourists can rushed here which motivates hotel industry.

This group works for the enhancement of their human resource by adopting various techniques in order to update their strategies and tools with the recent time.

The Jumeirah Group diversified itself into various sectors such as academics, water parks, spa, residents etc which strengthen the company (Jumeirah Group, 2008).

Weakness:

In the year of 2010, Dubai is considered as the expensive city that lies at fifty five positions in the list of most costly cities. These days it is becoming extremely expensive in the terms of travelling, hospitality, hotels etc. which may affects the economy as well as businesses.

In the recent time Dubai has undergone in the bubble crash of real estates because of the reason that there was a sudden drop in the investment being made in the sector and due to the lack of investments the real estate sector crashed. It affected economy and still it is on recovery mode.

In the Middle East, the rate of crime is low in spite of that it had been noticed that there is an increase in sex and drug crimes and which got huge media publicity which influence the hotel industry.

In Jumeirah Group, employees are working belongs to various nations that have there own culture sometimes this differences in culture affects the working of company (Jumeirah Group, 2008).

Opportunities:

Prospective economic development opportunities due to increase in prices of oil, this economic development leads to contribute remarkable benefits to the hospitality business.

Further growth prospects in the tourism industry of UAE with 15 million foreign tourist visitors expected up to the year 2015 proves to be very helpful in the tourism business of Jumeirah group.

Dubai is considered as the business and tourism hub of UAE and Middle East, it has high business growth prospects including geo political opportunities from the west and emerging authority from the east and ultimately helpful in providing good business opportunities to the Jumeriah group.

Initiatives taken by UAE government towards the development of hospitality sector provides ample amount of opportunities to the Jumeirah group.

Unique experience offer by the Jumeriah group in the form of ethnic heritage services pertaining to the hospitality leads to enhance the number of potential customers.

UAE is the business hub of Middle East and hence various business tourists are prospective customers for the Jumeriah group.

Various promotional schemes provided to the customers helps in the boosting of business of Jumeriah hotels.

Enhanced brand image and brand equity for the augmented quality service deliverance to the customers helps in the further growth and expansion of the business of Jumeriah group.

Jumeriah group provides a wide variety of cuisines including the Arab cuisines, Indo Thai, Chinese, Italian, Mughlai cuisines etc. to its customers which helps in increasing the profitability of the group.

The augmented exteriors and interiors of the hotel in comparison to the competitors delight the customers and attract them to take the services of Jumeriah group again and again.

Delivering the world class hospitality services at the affordable rate helps in increasing the number of local as well as foreign customers of the Jumeriah group (Jumeirah Group, 2008).

Threats:

The development of the various other cost effective and stirring competitive locations like Muscat, Kuwait City and Doha puts major barriers in the development of Jumeirah Group.

Prague and Istanbul are the cities which offer effective cultural tourism along with the fabulous contemporary services at the best possible price and hence attract most of the business tourists globally.

Due to political turbulence the business pertaining to the tourism and hotels affected a lot in some regions of UAE and ultimately affects the Jumeriah group in the region.

Lack of proficient training and development to the human resource in the hotel industry act as a major barrier in the quality service deliverance of the group.

Customer tastes and preferences and market trends pertaining to the hospitality industry changes dynamically and hence there is difficulty in the implementation of the latest trends frequently due to the limitation of cost and time.

Increase in the number of guest houses act as hindrance in the development of hotel business.

Various economical range hotels which provide the services at the cheapest rate are the major barriers in the developmental path of Jumeriah group (Jumeirah Group, 2008).

Competitiveness of Jumeirah’s Pricing Strategy:

Jumeriah provides a wide range of services in the hospitality business which encompasses a wide array of activities for the customers inclusive of diving and photography. With respect to the pricing of the hospitality services, Jumeirah ensures that the prices are maintained at competitive levels in keeping with the current market standards for pricing of hospitality services. Then exact pricing of the hotels and resorts have not been disclosed by the organization but from the reports available, it can be deduced that Jumeriah has competitive pricing strategy for its services (Course Pricing).

The pricing of the various courses offered by the organization are described as follows:

Certification Courses
AED

e-Scuba Diver

1,450

e-Open Water Diver

1,850

e-Open Water Referral

1,000

e-Rescue Diver

1,850

Emergency First Response

700

Experience Programs
AED

Discover Scuba Diving Beach

325

Scuba Review (inc two o/w dives)

650

Scuba Review Pool Only

300

Bubble Maker (ages 8+)

275

Seal Team (ages 8+)

1,500

Master Seal Speciality Dives

275

Instructor Development Courses
AED

Dive master

3,000

Assistant Instructor

3,000

e-Open Water Scuba Instructor

4,000

PADI e-IDC

7,000

IDC Staff Instructor

2,500

Master Scuba Diver Trainer MSDT

2,500

Emergency First Response Instructor**

2,500

Speciality Courses
AED

Wreck Diver

1,400

e-Enrich Air Nitrox

700

Deep Diver

1,600

Peak Performance Buoyancy

700

Search and Recovery Diver

1,400

National Geographic Diver

1,200

Underwater Navigator

1,200

Digital Photographer

1,200

Oxygen Provider Courses

800

Night Diver

1,200

Musandam Courses
AED

e-Open Water Courses

2,550

e-Adventure in Diving

2,550

Source: (Course Pricing)

These prices are in accordance with the industry standard for the pricing of these services which is indicative of the competitiveness of the pricing strategy of the organization. In terms of the costs incurred by the company in obtaining raw material and resources for their business units, they are able to source the requirements at competitive prices. Moreover they have undertaken efforts to minimize their operational costs by adopting green practices and this has enabled them to maintain their prices at adequate competitive levels (Course Pricing).

Competitive Strength and Leverage of Jumeirah Group in comparison to its Rivals:

Jumeirah is faced with adequate competition in the hospitality industry from major organizations that have provided competition on a global scale also. The main competitors of Jumeirah group are:

Hyatt Hotels Corporation

Fairmont Raffles Hotels International Inc. (Corporate Responsibility Report 2008)

Four Seasons Holdings Inc. (Corporate Responsibility Report 2008)

Jumeirah is able to manage the competition in the market adequately and this has been made possible due to the continuous adaptation of the company to the environmental changes and the incorporation of the technological advancements to provide a comprehensive set of services aimed completely at achieving consumer satisfaction. Jumeirah Group is credited with having some of the most complex and biggest projects in the hospitality industry which itself speaks about the high quality standards that the organization has assured in these facilities (Corporate Responsibility Report 2008).

The organization also has its projects in America, Europe and Asia Pacific. In these regions also, the company is able to successfully manage the competition by providing a wide range of consumer oriented services are competitive pricing. One of the main strategies of the organization has been to constantly upgrade themselves in terms of technical infrastructure and the aesthetic ambience in the facilities. It is this feature which has provided Jumeriah with a significant leverage even in the international hospitality market (Corporate Responsibility Report 2008).

The company has started pondering over the possibility of entering conservative foreign markets such as China as they have highly prospective business opportunities. Moreover their advanced technical infrastructural knowledge has enabled them to compete effectively even in new markets and their portfolio of globally acclaimed projects has enabled the creation of a strong brand image by means of which the organization is able to effectively reach out to the target consumer segments (Corporate Responsibility Report 2008).

Strategic Issues and Challenges in the Achievement of Strategic Objectives:

The achievement of strategic objectives is a challenging task and is easily affected by the presence of environmental cha

Introduction

Dr Jim Macbeth (2005, p.963), a lecturer and researcher in Australia who specialises in tourism research, has put forward the argument that, in the modern world, the stakeholders involved with the tourism industry, primarily the educators, developers and providers, need to find an “ethical” stance that will create a natural and appropriate platform for studying sustainability in tourism. To assess the validity of this assessment, one has to first consider the way that tourism research has been conducted and evolved in recent decades, together with the approach that has been used by the tourism industry in dealing with and combining the ethical and sustainability issues. From this a discussion on the relevance of ethical issues that are needed to address sustainability can be developed.

Tourism Research

As Dr Macbeth (2005) observes, historically, tourism research had evolved into a multi-faceted approach, which is based upon the four main threads outlined in the study conducted by Jafa Jafari (1990). In the initial stages, such research concentrated mainly upon the economic aspects of the tourism process. Being directed in this manner, the result of this research tended to emphasise the fiscal benefits that developing tourism would bring to a particular destination and the commercial organisations. However, with the increasing prevalence of the implementation of the economic research and their impact on destinations, researchers began to ask questions about the adverse social and cultural effect tourism was having. These two processes covered the tourism industry through the era of growth in mass-tourism.

Alternative Tourism

The third stage of tourism industry research development moved to the study of a new tourism phenomenon, alternative tourism, Initially, this was just seen and studied as a different level of tourist consumer, one whose demands and expectations were more than just the for the sun, sea and sand vocation of the mass-market vacation. These are the tourist who want independent and self-fulfilling vacations, ones that provided a unique level of escape. They were seeking the more active vacations, ones that gave the feeling of “self-autonomy and self-invention” (Cohen and Taylor, 1992, p.25)

It was as a result of this movement that the educational institutions, particularly universities, became more interested in treating tourism as a bona-fide study subject. Universities increasingly offered courses aimed specifically at tourism as they took a deeper interest in the subject. Jafa Jafari (1990) was also correct in his prediction that the global educational commitment to tourism has increased at a faster rate from the date of his publication than it did previously. In addition, the educationalists, scholars and researchers have expanded the areas of their research into other and dedicated aspects of the subject.

Sustainability

In the last two decades two areas of tourism have attracted particular attention in educational and research, these being sustainability and ethics, in that order. Sustainability, which has been a driving focus in business for several decades, was the first area that caught the interest of tourism researchers. Initially it was approached on the basis of how to protect and maintain the attraction of destinations that were experiencing mass tourism growth. However, with the advent of increasing concerns regarding protection of the historical and natural environment, together with the increased interest in the physical damage that man was causing the climate, the scope of research into sustainability in tourism broadened significantly. Studies were conducted into ways in which destinations of historical and cultural interest could be exploited for tourism purposes, and to the economic benefit of the local community, whilst at the same time ensuring that the sites remained intact and did not become damaged or adversely affected by the increasing tourist traffic influx.

Sustainability in natural destinations also received a lot of attention. The question of how one managed the dichotomy of conflicting issue that arise between the expectation and perception of the tourist consumer on the one hand, and the sustainability requirements of the destination on the other, were issues that resulted in a number of studies. For example, as Dr Macbeth (2005) has observed in terms of “wildlife” tourism, one has to decide how far to provide the natural experience of wildlife adventure that the tourists demands, whilst at the same time allowing the wildlife the ability to be sustained in their own environment. The discussion as to whether limited captivity, as is the case of the safari parks of Africa, provided a sustainable answer, namely would it still provide the experience that the tourist consumer required although not strictly a natural experience, was undertaken. One study into this specific subject by Newsome, Hughes and Macbeth (2005) showed that captive wildlife, seen in a natural setting, received a positive response from the tourists, fulfilling their expectations, whilst at the same time this environment offered some protection for the animals and their habitat. Similar issues and concerns have arisen regarding the tourist attraction to natural places of outstanding beauty, such as lakes and mountains. Here again, studies have concentrated on the complex issue of how to satisfy the tourism need without allowing that need to destroy the environment being enjoyed.

However, problems began to develop when the theories were put into practice. As Fennell (2006, p.1) mentions in his book, a “negative backlash that has come about regarding the so-called ‘new tourism.’” One of the main reasons for this was that not all of the stakeholders involved in the tourism research were being adequately considered. As Fennell (2006, p.4) explains, there are three significant human sides to this triangle, being the tourist, the organisation that arranges the travel or vacation, and those who reside at or close to the destination. As a result of these mounting concerns, the issue of “ethics” began to arise.

Ethics

Ethics are codes that are derived and constructed from the moral value that is attached to an action, and they apply to every aspect of our lives. In other words the fundamental ethos of ethics dictates that the action or behaviour of a person, group or organisation should be appropriate to the issue and be seen to be conforming to the expectations of those affected by that behaviour (Fennell 2006, p.57).

Like the word “sustainability”, the term “ethics” has in recent years become a featured part of the rhetoric within the business world as a whole and the tourism industry is no exception (Pearce, Moscardo and Ross 1977, p.89). Much is written in promotional material by tourism organisations about the ethics of their product and the ethical principals by which they work. In fact a plethora of ethical codes have been produced for all tourism industry stakeholders including, “codes of ethics for travellers; codes of ethics for tourists, for government, and for tourism businesses. Codes for all… ” (Fennell, 2006 p.241). However, partially as a result of the fact that such codes were not considered to be sufficient, and did not respond to the issues that were being raised, tourism researchers such as Jim Macbeth (2005) and others began to study how ethics should be viewed and used when dealing with the problems of sustainability within tourism. To do this meant that one had to look at ethics from the point of view of all shareholders, which, when addressing the three mentioned in Fennell’s (2006, p.4) study, meant understanding the effects that tourism policy and planning had on them. In addition there is the ethics related to the impact vacations will have upon environmental issues and how to handle these facets.

In term of the application of ethics to the tourist consumer, research has to consider both aspects of these stakeholders. Not only is there the moral and ethical issue of ensuring that the tourist perceptions and expectations are honestly matched, but there is also the tourists own ethical standards and how they impact upon the success of otherwise of the sale of the destination product. The authenticity of the wildlife issue has been mentioned previously. Although, the majority of tourists considered the “captivity in natural surroundings” to be a natural wildlife experience, is it ethical for the destination to be portrayed in this manner? Similarly, is it ethical for the wildlife to be subjected to this sort of unnatural control simply to satisfy the needs of the tourist consumer?

The tourist attitudes to “alternative tourism” have also changed. The tourist consumer has become more aware of the environmental issues surrounding destinations and vacations. As Pearce, Moscado and Ross (1997, p.152) explain in their study regarding the tourist relationship with the destination they are visiting, the “environmental attitudes to tourism are not held in isolation but, for some citizens, are a part of a larger environmental ethic.”

An increasing number of tourists no longer expect their vacations to include all of the environmentally damaging aspects that were previously provided, neither do they expect the planners and policy makers to develop areas for vacations to the detriment of the environment; historical and cultural values. Similarly, they do expect those same persons and organisations to act towards the tourist consumer in an ethical manner. The perception is that, whilst providing the destination for vacation, this should be conducted in an ethical manner, ensuring that the correct measures are taken to ensure sustainability of the site and those communities, wildlife and natural resources that depend upon it.

Brokers

Brokers include all of those parties that have an interest in providing the destination and its activities to the tourist. This includes the local governments and policy makers, those who develop and maintain the sites, such as the hoteliers and attraction owners, and the sellers, being travel agents. All of these organisations need to address ethical issues that attract to the services and facilities they provide.

Research has shown that many of these operators and brokers are already promoting the ethical aspect of their service, and are claiming that they have taken on board the demands of the consumer. For example there are corporations whose “Ethical tours claim to combine environmental education with minimal travel comfort, help protect local communities and environments” (Mowforth and Munt 2003, p.51). However, research and studies undertaken cast doubt on many of these claims. As Mowforth and Munt’s (2003, p.202) studies show, whilst the terms “environment,” “sustainability” and may appear in the organisation’s publicity to promote their ethical stance, it does not necessarily mean that these are factual claim. One representative, when questioned by these researchers in regards to their corporate responsibility to inform their consumers about the affect of tourism, responded that their primary task was to sell vacations.

Much of the research work that Dr Macbeth (2005) has undertaken over the years, has been specifically targeted at endeavouring to create a platform which allows these organisations to address the ethical issues that face them in the provision of destinations and services, so that the claims made can be supported by genuine action. Macbeth has provided both theoretical and practical examples of how a destination can be designed in such a way that it incorporates the needs of all the stakeholders, whilst at the same time limiting the damage that can be caused by unethical methods. This includes how to involve the communities at all levels of the development of the destination and its running; ensure safety of the local environment, historical venues and places of interest; and at the same time presenting the destination in an ethically positive manner that will still address all of the tourist consumer demands and expectations and sustain tourism usage.

One of the most difficult ethical issues facing tourism today is the community that live around or are involved in the destination site. This is especially true in areas such as developing countries and where there is a new destination being developed or exploited, as well as areas that have not had previous experience of such ventures within their locality.

In the case of communities in and surrounding new destination developments, there are a number of ethical issues to be addressed. For example, whilst most may desire the benefit of such a development, Dr Macbeth believes that the developer has an ethical duty to ensure that the community is fully aware of the impact that the developed destination will have on their lives, environment and, potentially, their culture. It is accepted that this is not an easy task to achieve, particularly as with no previous experience by which to make a comparison, these communities may not fully comprehend the impact even when it is explained to them. Nevertheless, as the case studies and actual projects carried out by Dr Macbeth and his students have demonstrated, it is possible for such an understanding to be achieved (Jim Macbeth 1997).

Community reactions are very important to the successful development of any destination site. Therefore their involvement with and acceptance of the project is important to achieve. As Pearce, Moscardo and Ross (1997, p.6) confirm, “the issue of how communities shape and respond to social and environmental changes is a driving factor in assessing community response to tourism.”

Environment

Finally, there is the issue of ethics in respect of the environment. In the current climate of potential threat to wildlife, dwindling natural resources, locations and the larger environmental issues, destination managers have an ethical duty to play their part in its sustainability. They also have a duty to ensure that their development does as little environmental damage as possible and contribute to the protection of the environment, rather than add destructive forces that will increase the dangers and damage.

This includes such matters as energy conservation, emission control, and protection of wildlife, heritage and local communities. For example, with wildlife it is important that the planners are aware of any endangered species located within the destination target area, and ensure that the neither the development, nor the resultant tourist consumer activity can in any way add to the endangerment of that species.

Ethical research

It is important that, prior to the commencement of any development, research is undertaken to ensure that all of the ethical issues are addressed. The organisation needs to understand the impact that construction projects might have on the local environment, and its impact on issues such as wildlife protection and climate emissions. The research must also evaluate the effect of the development on the local population, its culture and heritage. One important proviso of the research that is undertaken is the independence of the researchers who undertake the study. Whilst, as is increasingly the case with studies and research projects that take place within universities, the planners and policy makers may contribute funding for the project, it is essential, and ethically correct to ensure that these people and organisations are able to carry out their tasks without any influence or pressure applied by those organisations.

The purpose of such research is to reach a conclusion that provides for an ethical stance that all of the stakeholders can agree is desirable and, in addition, provide recommendations as to how the project and the ethical stance can be achieved and protected. In essence it should form the basis for “the purpose of identifying a template from which to aid in the development of tourism ethics.” (Fennell, p.197)

Conclusion

From the various researches that have been studied in the preparation of this paper, it is the author’s opinion that the hypothesis statement made by Dr Jim Macbeth is supported. There is a need for the educators and other stakeholders in the tourism industry to review the issues and construct an “ethical stance” that provides for a sustainable platform. It is equally importance that the strategy evolved from such a stance is seen to be effective and transparent to all concerned, with a determined effort to address and maintain all of the issues that constructing and maintaining a vacation destination involves. It is equally important to ensure that any studies and researches undertaken in an effort to achieve such a position are arrived at as a result of full discussion with, and involvement by all of the stakeholders involved with the product.

Fennell (2006, p.346) observes, “In allowing ethics into tourism, we open the door to philosophy and the humanities.” Whilst it is accepted that this is the case, in the view of the author, there is no possibility of omitting this factor from the tourism research process. Ethics is an integral part of the tourist consumer’s human decision process. It is the stance that is taken on those ethics and the way it is approached that is important.

References

Butcher, Jim (2003). The Moralisation of Tourism: Sun, Sand… and Saving the World? Routledge. London UK.

Cohen, S. and Taylor, L (1992). Escape Attempts. The Theory and Practice of Resistance to Everyday Life. Routledge. New York. US.

Fennell, David A (2006). Ethical Tourism. Channel View Publications. Clevedon, UK.

Jacobsen Damien, Carson Dean, Macbeth Jim and Rose Simon (2005) Prosper Pilot Case Study. Sustainable Tourism Cooperative Research Centre. Queensland, Australia.

Jafari, Jafar (1990). Research and Scholarship: The Basis of Tourism Education. The Journal of Tourism Studies, Vol.1, No.1. Queensland, Australia.

MacBeth, Jim (2005). Towards an Ethics Platform for Tourism. Elsevier Ltd. Annals of Tourism Research, Vol 32. No. 4, pp 962-984. Oxford, UK.

Macbeth, Jim (1997). Tourism, Policy and Planning in Australia and New Zealand: Issues and Cases. Irwin Publishers. Sydney, Australia. Section 3, Chapter 13.

Mowforth, Martin and Munt, Ian (2003) Tourism and Sustainability. Routledge. London, UK.

Pearce, Philip L., Moscardo, Gianna and Ross, Glenn F. (1997) Tourism Community Relationships. Elsevier Ltd. Oxford, UK.

Cohen, S. and Taylor, L (1992). Escape Attempts. The Theory and Practice of Resistance to Everday Life. Routledge. New York, US.

Newsome, D, M. Hughes and J. Macbeth (2005) Captive Wildlife Tourism in a Natural Setting: Visitor Satisfaction as a Measure of Success at Barna Mia, Western Australia. Journal of Ecotourism. Vol. 4, No. 2, pp73-91. Australia.

This report will focus on the environment in which GL events is currently operating. GL events started as a small company based in Lyon in 1978 providing furniture and stands for exhibitors. Through mergers and acquisitions, they have progressively evolved to become an important player in today’s exhibiting and event world with 34 venues around the world, an event and exhibition full-organising service and a portfolio of 250 trade-shows in various industries (food & beverage, sport & leisure, health, etc.).

Influencing all trends and being influenced by all trends, the exhibition and events industry is in the centre of it all. No company can succeed without being aware of the environment it is evolving in. In the exhibition and events industry, companies need to pay particular attention to details impacting not only its industry directly but also every other sector of activity as it would soon have repercussions on future events, exhibitions, product launches, etc. For this reason, a good PESTEL analysis for the industry needs to cover a broad range of issues and analyse many trends which may not influence events yet but could soon be a threat if companies do not react and stay in the times.

This report will focus on a PESTEL analysis (Political, Economic, Social, Technology, Environment, Legal) of the exhibition and events industry conclude by establishing which factors GL events should most take into account going forward as they could be potential threats or areas of opportunities in the years to come.

Political:

There are two main political factors influencing the industry today. One is the increasing political pressures to make regulations and policies to reduce greenhouse gas emissions. We will see in the environmental section that this trend started with consumer awareness but it is no longer just something the clients want to know more about, it has become an obligation. This has greatly impacted the transport industry, in particular airlines which found their image hit as people all around the world pointed to airplanes being a major source of pollution. This impacts the event and exhibition industry, especially at a time when various “green” technologies are evolving to permit meetings, conferences and even exhibitions to take place online (Long, 2009). This will be developed further in Environmental and Technology sections.

The second is the increased globalisation and liberalisation of trade and deregulation (Dwyer, L and Edwards, D 2009). This is very important in terms of number of potential competitors and number of potential clients. Companies need to learn to evolve in a globalised economy, taking advantage of it by going to find new markets, possibly entering into partnerships with similar companies to widen market share and visibility. With this liberalisation of trade comes political pressure to have global higher standards of living. If you do not see your neighbour’s yard, you do not know that it is greener, when you break the fence, you find that it is. It is this situation that developing countries are finding themselves in today. Citizens all around the world can use internet to gain knowledge about how others are living and become envious. Because of this, countries want to attract foreign investment to boost local economies and gain wealth and higher standards of living. This creates opportunities for countries not only to establish new and cheaper production lines but also to display their products in emerging markets. Last week for example, Apple launched the Iphone4 in China (AFP, 2010).

Economy

This last point brings us to analysing the economic trends and pressures impacting on the exhibition and events industry. Although the UNWTO 2002 forecasted world tourism to grow at a rate of 4.1% annually until 2020 (Dwyer L, Edwards D., 2009) due to rising wealth internationally, the exhibition and event industry has seen a slow in growth since 2005 but a rise in exhibition and event attendance (Biba E, 2008). This puts the industry in a rather awkward position. There are people coming to exhibitions but exhibitors have switched their approach towards events and exhibition.

Indeed, especially with the recent crisis, the first expenses cut by organisations worldwide were advertising and travel. Exhibitions and events being in the centre of this, the industry was hit and forced to react. The expectations from exhibitors will be looked into more fully when we look at the social aspects of the trend but the main ideas are that companies are looking to maximise their ROI (return on investment) (Kovaleski D, 2009) and minimise the perception of frivolous spending (trips, events, etc.) (Events Managers, 2010). In order to do this, companies are squeezing suppliers to get more value for money and investigating the return on investment of their events much more closely and looking at alternatives more then they did before. Companies are not so much cutting their exhibition and event spending so much as allocating it more carefully and with conditions of an assured return (Biba E, 2007). This has changed to job of the event organiser who needs to think of more innovative ways that the company can use to introduce their product. A leaflet handout at the exhibition is no longer sufficient, people want to be amused, entertained, really involved in the product (Furness V., 2007). Because of this, the industry is moving away from major events in favour of smaller, more intimate events where companies can really interact with potential clients (Biba E, 2007).

Another aspect companies are putting under the microscope is how to measure ROI generated from social networking and e-marketing. Indeed, if an event is posted on Facebook, LinkedIn, various industry blogs and online magazines this all takes resources in terms of man-hours put into promoting the event on these new channels but how can a company measure that this was efficient? How can the event planner know that the Facebook invitation attracted the client and not some Email they receive every year which pushed them to look for a Facebook event? (Terrero R, 2009). Today, there is little way of knowing exactly what path a client took and what really convinced them to attend your particular event.

Social

Indeed, the main goals of events and exhibitions are brand awareness, brand preference and networking. Although brand awareness can be achieved through various communication mediums (advertising online, billboards, TV, etc.), it is not the way to create brand preference. Brand preference is achieved through interaction, experience of the brand with the client (Kovaleski D, 2009) and leads to better ROI for the company. This means that exhibition halls and event organisers are not expected to provide a massive attendance so much as a good promotional space and real, targeted potential buyers (Biba E, 2007). From the buyers’ perspective, they want to experience and know the brand as a whole. With globalisation came increased competition and consumers now have the possibility to buy from anyone anywhere around the world. The quality and price are no longer the only issues, people and therefore companies look at the triple bottom line. It’s no longer just about economics but also the social and environmental benefits of a product or company.

Clients don’t want a coupon or a price comparison when they come to a product launch, they want to feel and experience the product for themselves (Dwyer L, Edwards D., 2009 and Furness V., 2007). There needs to be a real interaction between companies and clients. Companies want to build a rapport with their clients, want to become part of their lives. This has forced exhibition halls and event managers to re-think space use and create sections that are dedicated to sitting down in a relaxing atmosphere with a drink to discuss business more casually. The bottom line is still to get the client but the approach is much friendlier then boxed up in a meeting room (Kovaleski D, 2009). This also has an impact on stand design. Exhibitors are encouraged to pay more attention to details such as carpet colour as it has been shown that if the carpet colour of the stand is different from that of the exhibition hall, it may create a barrier and deter clients from approaching (Kovaleski D, 2009).

Technology

With the development of various technologies, companies have the opportunity to have a virtual event run along-side of the live event. This allows them more time to prepare the client for the interaction and pursue the relationship after the event (Furness V., 2007 and Kovaleski D, 2009). This phenomenon of virtual event is not only to accompany live events, there are now events using only virtual platforms, simulating a physical event on the online world. Platforms such as Second Life are being used by companies to reach potential clients without having to create an event in one physical place. This has the advantage, if not necessarily of price reduction, but to be able to reach clients who may not be prepared to travel to meet you. You can meet them where they are all at once (Biba E, 2008). Using 3D technologies, your virtual exhibition can be as simple as visitors being able to look around at the different stands and as complex as re-creating the event in a completely online world (web chatter, 2010). This is not to say that virtual events will completely replace live events because, as we have seen, people still want to interact and know who they are dealing with but it certainly does replace certain live events already (Biba E, 2007).

Another important aspect of the new technologies that the exhibition and event industry should be aware of is the democratization of the internet. This means two things. First, even small firms can bring competition to the large, well-established event organizers if they have good SEO (search engine optimization) and general web-marketing skills as they have equal visibility (Dwyer L, Edwards D., 2009). Second, through UGC (user generated content) anyone can post their feedback about their experience with a certain organizer and make it available to the world (Papathanassis A, Buhalis D, 2007). This is good news for companies who have good relations with their clients and suppliers but will be difficult for companies who were focusing on “one-shot” clients and therefore not paying much attention to details.

The final aspect of technology refers to the traditional definition of technology, ie: “the application of scientific knowledge for practical purposes, especially in industry” (Oxford Compact dictionary). Here we are referring to how to build ecologically friendly stands? What technologies can we use to handle the new products that now need to be used in order to create a “green” stand?

Environmental

We are now obviously diverging to the environmental issues around the exhibition and event industry. Indeed, it is becoming increasingly important for companies to be perceived as environmentally aware (Biba E, 2008). This presents a good opportunity in term of cost reductions as decisions such as travelling less can be explained as an “environmentally gesture” rather then cost-cutting in a bad economy (Events Managers, 2010). However, it presents a challenge for events and exhibition companies who now need to develop “green” stands made with ecologically friendly materials and production techniques and purchased from local suppliers to avoid pollution from transport (Biba E, 2008).

Another aspect the exhibition and event industry will need to look at closely is the impact that global warming will have on their choice of venue and the viability of these choices with respect to client attendance and attractiveness (Dwyer L, Edwards D., 2009). Indeed, sunny destinations which are very pleasant to hold events at may be changed for the worse in the next 30-50 years while new destinations will establish themselves as more favourable climate-wise.

Legal

The final point we will view is the legal aspects that the industry needs to pay attention to. The policies regarding the reduction of greenhouse gas emissions and the liberalisation of trade have lead way to many legal documents and laws by countries around the world which need to be followed by event and exhibition organisers and by venues to make sure they are acting within the limits and scope of the law.

However, an important legal issue is the terms and conditions put forward by events and exhibition planners and venues. First, with regards to particular cancellation fees, they need to protect themselves without being outrageously unfair to the potential client which is looking at cancellation fees and possibilities more closely since the crisis. Second, with respect to the inflexibility of minimum numbers, if venues hope to attract client, they need to consider the advantage of having one definite client with a contract who may not bring exactly 1000 participants versus one potential client who is still shopping around and may never sign (Event Manager, 2010).

From this PESTEL analysis, we can draw several conclusions for GL events next step. First, it is clear that the new technologies, though they will not fully replace live events, are certainly complementing them and they are here to stay. GL events could take advantage of this by creating a network with all its venues. When one event is organised in Nice for example, they could offer the possibility of extending it via 3D conferencing tools to other of their venues around the world. This would increase the potential number of attendees who would not have to sit in front of a computer to enjoy the virtual event but would benefit also from meeting with others who are also in their geographical areas and enjoying the event virtually. People in China could enjoy the conference of the event taking place in Nice and have the opportunity to network with other people afterwards via video-conferencing and face-to-face with people who were also unable to attend the meeting.

A second opportunity GL events could take advantage of is the growing importance of the perception of being environmentally friendly which pushes companies to invest in “Green” stands. Through their event organising service, GL events should try to develop the competencies to offer this possibility to their clients, if possible at a similar cost, to make sure they are in keeping (and even a little ahead) of their times.

In these fast changing times, the opportunities are still up for grabs but will soon become threats if venues and organisers do not react quickly.

This report is about Ocean Park of Hong Kong – one of the largest amusement ocean park in the Orient and even in the world. Situated in financial center of Southeast China this park – add some info about park!!

In this report we are going to cover such topic as strategy concepts of Ocean Park, external and internal environment of organisation and its corporate, business-level and international strategy. On base of data collected we’ll give our recommendation and advice to CEO and Board of Ocean Park of Hong Kong about Park’s strategy to the next 10 years (from 2005 to 2015).

The main aim of this report is to provide in-depth strategic analysis to CEO and Board members. Thus, this work is focused on challenges, opportunities and threats of organisation, its culture and economic aspects, strengths and weaknesses of organisation, core competency of ocean park in order to help to improve it in anticipation of arrival of Hong Kong Disneyland.

Strategy concepts and vocabulary
-Mission (Strategic purpose, not specified)
Ocean Park provides all guests with memorable experiences that combine entertainment and education, while inspiring life long learning and conservation advocacy. Our aim is to maintain a healthy financial status, while striving to deliver the highest standards of safety, animal care, products and guest service.
http://www.oceanpark.com.hk/html/en/footer/corporate-information/vision.html

-create all activities for perfect family holiday

-increase involvements of visitors in environmental issues and lives of animals

-Goals and objectives to fulfill its mission

“Boost the number of annual visitors from four million in 2004 to five million by 2010”

“To make a 0,5 per cent contribution to Hong Kong’s gross domestic product (GDP) in 2010” (page 7)

-Vision (More specified)
http://www.oceanpark.com.hk/html/en/footer/corporate-information/vision.html
Ocean Park aspires to be a world leader in providing excellent guest experiences in a theme park environment connecting people with nature

– Become number one marine-based park for each family not only from Hong-Kong but also from mainland China.

– To be main attraction for all tourists, who visit Hong-Kong

-What performance measures would you use to determine the success of Ocean Park?

-It is the hometown favorite. It had been a long-time favorite of several generations ((it’s been operated for more 28 years). Many local people were sympathetic to Ocean Park. People who had visited the park as children were now bringing their own children to visit the park. Its reputation even extended into mainland China. It had become a fixture of Hong Kong’s cultural heritage. (p.5)

-The number of visitors in 2004 is 4 m of people (with daily maximum capacity 35,000 people).

-Total revenue in 2004 was 536, 2 HK$ m comparing to 428,3 HK$ m in 2003, surplus for 2004 year was 95,7 HK$ m comparing to deficit 4,1 HK$ m in 2003.

– recognizability of new brand (Whiskers became a household name in Hong Kong)

-Who are the various stakeholders in Ocean Park organization (how might they impact on its purpose and mission)?
Stakeholders, who help to achieve park’s purpose and mission:

Hong Kong government, Home Affairs Bureau and the Tourism Board, employees of Ocean Park corporation, its visitors (customers).

Interfere with achieving park’s purpose and mission:

Activist groups (certain environmental groups and animal rights activists) – forbid of buying and transportation exotic animals to park, trade associations and unions (bus companies and taxi drivers) – forbid in building a mass transit railway (MTR), competitors – regain market share.

External Environment
-Conduct a PESTEL analysis for Ocean Park, identify the key driving forces for change facing Ocean Park; Rank key driving forces based on their predictability and potential impact on Ocean Park, then develop some scenarios and identify implications of these scenarios for Ocean Park.

PESTEL:

Political:

Government support

Improving relationship between Hong Kong and Mainland China

Promotion of tourism

the easiness of the restrictions and promotion of the free travel of China in 2003 that helped to inject a new life to the tourism industry of Hong Kong

environmental law

Economic:

Growth and development of the global amusement park industry

Disneyland’s arrival

Increasing number of mainland visitors

Increasing standards of living in midland China

Raise and spend HK$5.55 billion

Social:

Major events and activities (peak seasons and holiday themes: Chinese New Year, Easter Holiday, Summer Holiday, Halloween and Christmas)

Media, advertisement and publicity, required for these special events

Change of demographic (Population growth rate, age distribution, size of families)

Increasing the cost of labor and more guarantees for employees

Negative affect of Outbreak of Severe Acute Respiratory Syndrome (SARS) outcome

Technological:

Development of the amusement machinery industry

Increasing popularity of new technologies for consumers (internet, mobile, digital camera)

Amortization of park equipment

Developing of new transport system (for example, a mass transit railway (MTR))

Research and development activities (creating of new park amusement)

Environmental:

Opposition from certain environmental groups about the importation of wild animals to Ocean Park

Expenses on maintenance of exotic animals

Protests of animal rights activists against relocation of animals

Climate change (rain season in spring, hot in summer, typhoons in summer)

Legal:

Approval of Town Planning Board for hotel, Legislative Council for MTR station.

Restrictions on mergers

Employment laws

Key driving forces and their ranking :

1)Global changing in tourism for Hong-Kong and Asia-Pacific region (development of tourism in region)

2)Raise and spend HK$5.55 billion from private and government loans to revamp park’s well-worn product line (approval of development plan)

3)Disneyland’s arrival – worldwide success of main competitor-Disneyland, coming to Hong Kong (Disney’s success or failure)

Binary table of scenarios for Ocean Park’s key drivers (in decreasing order of their impact on park):
Development of tourism in region
Approval of development plan
Disney’s failure
Scenario
+
+
+
Successful scenario
+
+
–
+
–
+
Middle scenario
+
–
–
–
+
+
–
+
–
–
–
+
Failure scenario
–
–
–
-Define Ocean Park’s industry and conduct a five forces analysis: Which are the dominant forces in the industry? How may the five forces change? What are the underlying dynamics which are driving these five forces, and how may the five forces change? What are the impacts on key competitors and on Ocean Park? What can be done to influence the impact of the five forces?

Five forces analysis for amusement park industry:

1) Threat of New Entry

In terms of the amusement park industry, the entry barrier is high due to the need to invest large amount of financial resources (for park equipment, human resources maintenance), a lot of time required for park’s planning, construction, development and launching, a lot of licenses and legalization required (safety, sanitary, security etc.). In addition to the amusement park required land for a full scale development. This factor is important because Hong Kong has a high land price real estate market.

Re-write in own words!!!!!

2) Threat of Rivalry:

It is important to consider that with lack of differentiation, visitors’ choice will greatly over the price and service, thus causes pressure for the intense price and service competition. Due to high threat of rivalry, Ocean Park is implementing different plans and activities such as redevelopment and introduction of new attractions in order to catch the attention of the visitors and differentiate themselves from rivals. There are no rivals with exactly the same range of products. Disney’s arrival is only expected.

Re-write in own words!!!!!

3) Threat of Substitution:

(where this information from?? – I like this point!))

The main threat of substitution is Hong Kong Disneyland & Wetland Park, a new international theme park and an educational park (Appendix 2)??? Apart from this, there are other forms of substitution. From the education side, Hong Kong residents can switch to go to Cultural Centre, Mai Po Wetland, Hong Kong Zoological and Botanical Garden. For entertainment purpose, they can visit the Karaoke, Cinema, Game Centre, or have a day trip to China.

4) Bargaining power of buyers (visitors):

(where this information from?? – I like this point!)

-Tourists

Tourists have a low bargaining power as long as “must see” image successfully built-up and the Park cannot be replaced by other substitutes. Therefore, Ocean Park focuses to build up this image especially in Asia.

– Local residents

The buying power of local resident is high since they have many choices as mentioned above. The switching cost is relatively low. Also, Hong Kong people like new experience and their loyalty to the product are generally low. The Park, therefore, launched difference programs like “Big Five” events with difference theme each year to bring new excitement and experience to them. Besides, special discount in low season and year pass intent to attract…???

5) The power of suppliers.

Suppliers have quite high power. Thus, construction elements of amusement rides are huge and complicated, that’s why park is highly tied with supplier. Otherwise, this market is developed and the choice of suppliers is become greater now. While constructing buildings (hotels, etc) with particular contractor park can’t easily change to another contractor because of high switching cost). The situation with the exotic animals is such as Ocean Park can buy in particular country only.

Which are the dominant forces in the industry?

The dominant forces in the industry are: rivalry, buyers and substitutes.

How may the five forces change?

Looking forward, the five forces will change in this way:

-Rivalry will increase with Disney’s arrival;

-Buyer power will increase slightly;

-Substitute threat will also increase;

-Entry threat decrease dramatically;

-Supplier power will also decrease. (Exhibit 2.5 – p.72)

What are the underlying dynamics which are driving these five forces?

Aftermath of economic crises and increasing in number of suppliers will decrease supplier power.

Disney’s arrival decrease entry threat in entertainment park industry.

Developing of new technologies will affect rising of substitutes. Also competitors with new technologies will gain (in this aspect Disney has an advantage)

Disney’s arrival increase demands in diversification of Ocean Park’s products.

Ticket price advantages (185 HK$ for adult ticket at Ocean Park compared to 295HK$ for the same ticket at Disney).

The main rival (Disney) is also same market oriented (families with children).

What are the impacts on key competitors and on Ocean Park?

Five forces much more affect Wetland park – Ocean Park’s key competitor, located at the northern part of Tin Shui Wai, in Yuen Long – than Ocean Park itself, because Wetland park’s products are less differentiated. It has “a 10,000m2 visitor centre, Wetland Interactive World, and a 60-hectare Wetland Reserve.” (http://www.wetlandpark.com/en/aboutus/overview.asp). Arrival of other competitor – Disney and it’s substitutes – doesn’t affect much Ocean Park because it has it’s its own niche.

What can be done to influence the impact of the five forces?

More differentiation of new products, directed mainly to Chinese native culture will affect rivalry, substitutes and buyers. Unique high-quality products and services also will influence buyers. For seeking suppliers big impact will have Internet and special web-sites with best quality of service, characteristics, recommendations and prices.

Conduct a strategic group/space analysis for Ocean Park

There are 2 key competitors for Ocean Park:

First one is mentioned above Hong Kong Wetland Park. It is a conservation, education and tourism facility, consisted of large visitor centre, Wetland Interactive World and a Wetland Reserve. This park provided visitors with opportunities to observe wildlife, awareness and understanding the values of wetlands throughout the East Asian Region and beyond, wetlands conservation. So, it’s mainly about wetlands. The Hong Kong Wetland Park is also going to be a world-class ecotourism facility to serve both local residents and overseas tourists.(ttp://www.wetlandpark.com/en/aboutus/mission.asp)

Compare to Disneyland and Ocean Park, Hong Kong Wetland Park has different facilities and product range (such as themed exhibition galleries, a theatre, a souvenir shop, an indoor play area), provide different services and thus, like Disney and Ocean Park, has its own niche. The range of facilities provided is the narrowest among 3 parks. Thus, Wetland Park can’t meet demand of those visitors, who are looking for excitements and extreme pleasure, which can be found on a rides at 2 other parks.

Who are the main visitors? Is it local or global? Is it has the lowest range of facilities than Ocean Park and Disney? Much lower prices.

The second one – arriving in a nearest future The Hong Kong Disneyland.

After 28 years of operating as a near monopoly, Ocean Park would soon have to compete with one of the biggest names in the entertainment and theme park industry. Moreover, Disneyland targets the same group of park’s customers – families with children.

It has well-known brand and reputation. It’s the world leader in terms of entertainment. Several of Disney’s characters (Mickey Mouse, Donald Duck and Winnie the Pooh) were household names all over the world, including in Hong Kong. Thus, Ocean Park’s mascot, Whiskeys, appear lackluster by comparison. Image, which Disney company holds almost for a century (The Walt Disney Company was founded in 1923) and Disneyland itself (first park was opened in 1955) for half a century (compared to 28 years of Ocean park) helps to attract visitors not only from Hong Kong and midland China, but also from different part of the globe, especially those who are from the USA and Europe.

Among other advantages of Disneyland are:

– location: it could be reached in just 10 minutes from Hong Kong’s airport and less than 30 minutes from downtown Hong Kong.

-at least 5.6 million people were expected to visit the Hong Kong Disneyland during its first year of operation (compared to 4 million of Ocean Park expected visitors).

-the price claimed to be the least expensive among the five Disney amusement parks throughout the world.

-the area of Disneyland is 310 acres compared to 215 acres of Ocean Park.

-5 times greater investment than for Ocean Park.

-Expected economic effectiveness is 3 billion more.

-world-renowned innovation

-high customer service standards

Strategic groups within the entertainment and theme park industry in Hong Kong

Broad

Ocean
Park

Geographical Scope

Global

Product range

Disneyland

Narrow

Wetland Park

Local

Conduct a market segment analysis for Ocean Park: How is the market segmented? How could it be segmented? Where would you position Ocean Park’s products and services? Where would you position the competitor’s products?

Ocean Park is a part of entertainment and theme industry. Its market is families with children. Disneyland – future competitor – applies to the same market. Despite this, Ocean Park has its own niche – visitor from midland China.

Internal Environment
-What resources and capabilities does Ocean Park have?
Resources (what a firm has):

1)Tangible:

-financial – suppliers of money (private and government loans) – expected HK$5,6 billion investment; HK$145 billion economic effectiveness; surplus from operations in 2004 was HK$182,2 million on revenues of HK$536,2 million ???;

-physical – Sea World, marine life and real animals:35 rides and attractions; 3 hotels; favorable and convenient location on the southern side of Hong Kong Island; wide range of new activities, such as the Abyss Turbo Drop thrill ride, seasonal and special events, popular water-related activities, interactive activities with animals, “edutainment” programs, successful Sea Jelly Spectacular and so on.

2)Intangible:

– long-time reputation of park with government, customers,

-new brand – sea lion named Whiskers;

-cultural heritage of Hong Kong

-great number of repeated visitors

3)Human:

-37,100 employees, their skills and knowledge;

-Thomas Mehrmann, new CEO of Ocean Park, and his previous experience at US-based Six Flags Corporation;

Natural and wild life focus (Interactive activities with animals)
Recreation and education
Capabilities (what a firm can do)

-New products, facilities and services development capability – continually adding new features and attractions (such as: a new roller coaster, a subzero Ice Palace, 7.6 million liter aquarium with an underwater restaurant, extra 33 animals species, the number of rides doubled to 70), so, become a nearest future one of the best marine-based theme park with strong connection with nature;

-Keeping park attractions fresh, novel and exciting, while minimizing costs;

– research and development, marketing and sales capabilities: plan to refurbish and rename Ocean Park’s 2 major areas (the Lowland and the Highland), new hotels to be developed, including a five-star boutique, spa-type hotel – this redevelopment plan would be completed in 2012!! – recommendation part too!!, plan to open offices in the major urban areas of Guangzhou, Beijing and Shanghai to enhance promotional activities in Hong Kong and attract more mainland visitors

-new incentive compensation, that linked employee compensation to the financial performance of park

-What might be the competence of Ocean Park?

Core competences – resources and competences which are both valuable to customers and difficult to imitate

-distinctive work culture, with its own norms and practices

-local market loyalty

-unique SmartFun Annual Pass program

-cultural aspect (cultural heritage of Hong Kong), orientation on specific market segment-mainland Chinese visitors,

-long-term reputation, distinct Chinese characteristics

-powerful brand

-customer trust

-primary focus of OP on real nature and wildlife in contrast to Disney’s strengths in cartoon characters, castles, virtual reality and fantasy

-focused on education and the live animal attractions — one of the key elements that will differentiate it from Hong Kong Disneyland when it opens in 2005. (from Echo’s articles)

-cost and differentiation of product (continually adding new features and attractions as well as price advantage over Disney encouraged visitors to return to the park)

-The aerial tram that takes visitors from the entrance side of the park over a hill to the rest of the attractions has become a Hong Kong tourism icon-is it still true?? (from Echo’s articles)

Competitive advantage is explained by the distinctiveness of its resources and capabilities, by offering customers greater value by means of lower prices or greater benefits and service

Competitive Advantages of Ocean Park over Disney:

-long-time reputation, -hometown favorite,

-cultural heritage of Hong Kong, orientation mostly on visitors from midland China

-first-mover advantages

-no need to engage in high-profile advertising and publicity, rely more on word-of-mouth

-more diverse and wide range of products (including Sea World, marine life, real animals plus 35 rides and attractions)

– price advantage: the admission price for Disneyland is expected more than twice higher for child and one and a half higher for adult than price of Ocean park. And visitors from mainland China are very price sensitive. SmartFun Annual Pass program with unlimited admission to the park for its holders within a year, and discounted prices for food, souvenirs

-Infrastructure – 3 hotels had been constructed comparing to 2 at Disney.

-orientation not only on entertainment, but also on education of visitors,

– differentiating by focusing on ecology and conservation issues

-recognizable brand

-In addition to all the American fun at the park, traditional Chinese holidays are still observed (Chinese New Year)

-Disney has its characters, but we have flexibility to mix and match and bring in other entertainment (from Echo’s articles)

-Does Ocean Park build its strategy on its resources, capabilities and competences?
Yes.
Importation of more species
Water/Sea-related construction
Hotel-better recreation
-Are they sustainable? How can they be developed?
Sustainable to some extent, but with some limitation.
For example, it may face the opposition from environmental group.

They can’t relay only on resources, capabilities and competences-they need to be developed, innovated and refreshed, because they may begin to look dated and shabby for their visitors.

SWOT Analysis

Positive impact
Negative impact
Internal environment
Strengths

-Diversified and wide range of amusements (thrills, animals, seasonal and special events)

-product line revamp

-Highly linked with culture of mainland Chinese visitors, knows their demands and behavior

-the main, oldest and most famous amusement park in the country (long-time reputation, hometown favorite),

-cultural heritage of Hong Kong,

-28 years of operating as a near monopoly

-no need to engage in high-profile advertising and publicity, rely more on word-of-mouth

-strong business connection to the local government (support from the government of Hong Kong and mainland China)

-renovation of the park’s brand image

-mascot as a brand

-previous experience of Thomas Mehrmann (new CEO of Ocean Park) in theme park industry (at US-based Six Flags Corporation)

-local market loyalty

-positive image of park

Weaknesses

-Located on a hills-hard to get to some riders-that’s why visitors experienced rides only once.

-different facilities are old and un-attractive and need renovation

-a lot of activities depend on weather???-ask Echo about it

-no substantial capital investment

External environment
Opportunities

-focusing on delivering mainland China’s visitors as well as foreign visitors

-development of new transportation South Island Line (when???-check case-and ask Echo about it) that would cause convenience and fast access direct to the Park for the foreign and local visitors.

-plan to build a mass transit railway (MTR) station to connect OP to the subway grid

-the development and improvement of the amusement machinery can impact the services and features of the organization and its relationship to their foreign visitors.

– raise the standards of park with Disneyland arrival

– fostering sponsorships

– plan for building new hotels (boutique and spa-type) – orientation on luxury tourism – new market segment

Threats

-economical instability (such as the Asian financial crisis of 1999-2001, lasted for 3 difficult years for OP ), outbreak of different diseases, such as Severe Acute Respiratory Syndrome (SARS) in 2003 (Both these factors can affect number of visitors and their buying behavior, worsening the park financial situation)

-arrival of Disneyland Hong Kong

-OP was situated on valuable real estate: it could be shut down and its land could be sold off for other recreational or commercial purposes.

Recommendation – p.6-7!!!

(recommend to use this business connection for future purposes, such as building a subway line for the visitors (it’ll happen in 2007). Say, in 3 years

Build a mass transit railway (MTR) station for connection to the subway grid. Till 2015)

(recommend to start innovation process, it will take about 6 years). Say, in 5 years

We have defined our relevant market for Flydubai as a low cost carrier within the product form level. Being positioned as a low cost national airline carrier, it’s facing a high competition from other national airlines which force the relevant market to be within the product form. (For more information on the relevant market please refer to appendix 2).

This paper will focus on presenting an environmental scan of the airline industry within the Middle East region during the time frame of 3 years (2009-2012). In order to do so, we will identify the significant trends and their consequent implications on Flydubai relevant market. This report will include an in depth review of the macro, micro analysis and its implications of Flydubai relevant market in the next three years.

Body:

In identifying the major key trends in the macro environment of Flydubai, we have addressed several issues that include the political, social and economical trends.

Flydubai was established by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai orders in march 2008 and started its operation in its first flight to Lebanon on June 1st 2009.Being fully owned by Dubai government and enjoy the full facilities offered in terminal 2 at Dubai International Airport, the company is having a competitive advantage compared to its rivals in the market as it enjoy the full government support and airport services. Furthermore, the current government trend in the labor force is towards emiratization and protecting labors rights. Being a part of the Fly Emirates Group, the organization will face no problem in emiratization as it will follow Fly Emirates emiratization strategy. The major challenge that Flydubai will face is being able to offer high paid jobs and reduce its operational costs as it is considered a low cost airline company.

Living in the current financial crises era, Flydubai was established in one of the most difficult time the country economy had faced in the last 25 years. “Falling oil prices, cooling real estate and construction markets, together with a slowdown in the tourism sector, especially in Dubai, means the UAE is expected to post low or possibly negative GDP growth in 2009”, according to analysts (Arabian Business, 2009). This information may be considered negative to many airline companies but it may be positive to a low cost airline like Flydubai as people are now focusing more in reducing their expenses as the incomes are reduced. This means their tendency of consumers focusing more on prices is increasing.

Furthermore, consumer behavior is changing towards low cost airlines especially in the Middle East region as consumers are persuaded by low prices and a better service offered by low cost airlines. According to a study done by Arabian Business website, it was found that 83 percent of the respondents would switch their preferred airline carrier, for a cheaper price, while 17.6 percent believed they would consider alternatives and trade off between the discount and lost air miles. It can thus be inferred that pricing plays a significant role in consumer behaviour and the decision making process especially in the current economic downturn era (Glass, 2008).

According to Dubai department of Tourism and commerce marketing “3.85 million tourists had visited the emirate in the first half of 2009, a five percent increase on the same period of 2008”. This figure strongly shows the current tourism industry market and how attractive it became even though of the current economical downturn. Other figures expect that the number of tourists will fall compared to 2008 figures but most figures have stated that there will be a positive growth in 2010. This figure shows that Flydubai will see a future growth rates in the coming 3 years as terrorism sector restore its high figures after overcoming the current downturn.

As observed by Andrew Cowen, CEO of SAMA Airlines, the market is shifting from the traditional major airlines business travel towards low cost carriers for trips within the GCC. Business travelers are changing their perception of low cost carriers, supported by the current economic downturn and the increase number of foreign businesses within GCC countries entering the UAE. This shows a trend of an increasing demand for low cost carriers in the next three years (High time for low cost carriers, 2008).

(For in depth information on the analysis of the macro environment of the airline industry please refer to Appendix 3)

In identifying the major key trends in the micro environment the following aspects that includes, Customers, Employees, media, shareholders, competitors and suppliers.

Customers who are price conscious are concerned with low cost airlines. Flydubai has focused on pricing strategy and flexibility because these two factors play a big role in determining the customer’s decision process on which airlines they choose to travel with. Moreover, the number of tourist from around the world including the region will grow more than 40% in the next 3 years in Dubai (www.realtyna.com). This shows that there will be increased number of customers who will use Flydubai airlines within the next three years due its successful use of pricing strategy and flexibility.

The Employees of Flydubai have good experiences and they were carefully selected from twelve different nationalities. According to Kenneth Gile, chief operating officer of Flydubai said: “We are extremely pleased with the talent of the pilots we have on board. On average, they each have more than 4,000 hours serving as captain in similar aircraft and a total experience of more than 8,000 flying hours – this is impressive by any standard” (Sambidge, 2009).

Flydubai is fully owned by the government of Dubai and its considered as a part of its mother company the Emirates Group.

The main strategy that Flydubai is willing to use for their marketing strategy is through word of mouth (buzz). This is because Flydubai is a low cost airline; they tend to set low budgets for their advertisements to keep their prices low.

The direct competitors of Flydubai are Air Arabia and Al Jazeerah airlines because these two airlines are also low cost airlines in the same country as Flydubai. However, the major competitor of Flydubai is Air Arabia because, first of all, they are the first to claim about low cost airlines in the Middle East region. Moreover, they hold the highest market share in the relevant market as identified before. Our market share comparing to those two carries are low because Flydubai just recently launched to the market. But, within the next three years we expect rapid growth in the market share because Dubai is a destination for tourists. The major indirect competitor is Fly Emirates which stands as the leader in airline industry in the relevant market and it will keep its performance in the next three years. The second indirect competitor is Etihad Airlines which is growing fast because of the unlimited support from Abu Dhabi government. In addition, those airline carriers make low price offers for the same destination that we have flight lines to.

The supplier of Flydubai is Boeing. Flydubai announced an order of 50 next generation 737 aircraft from Boeing. Sheikh Ahmed bin Saeed al Maktoum said: “The Boeing Next-Generation 737 is ideally suited to our mission to bring some two billion regional inhabitants affordable, efficient and flexible travel options to and from Dubai.”(For more information on the micro environment analysis, please refer to Appendix 4).

Implications:
Primary demand:

Low cost airlines are focusing on customers who are price conscious. The number of customers using the LCC airlines is increasing and it will continue growing in the next three years (www.gulf-daily-news.com). This is because, first of all, the percentage of tourists will increase by 40% within the next three years which shows that the market share of LCC will increase as well. Secondly, because of the economic condition, many people tend to save money and spend it on low cost airlines to travel more to the desired destinations. Users of Low cost airlines contain all different ages and nationalities. Moreover, cost is one of the main factors that affect customer’s ability to buy. The costs of these carriers are low and will continue to remain low in the next three years. This will increase customer’s ability and willingness to buy.

Selective demand

We can define the consumer decision making process as an extensive problem solving level, where they are introduced to a complete new brand with low brand knowledge. So, Flydubai should infusive more on their brand identity through the media and other communication types in order to enrich consumer’s knowledge. Once Flydubai had increased the level of consumer knowledge, we expect huge increase in market share in the next three years because the decision making process is going to shift from extensive problem solving to routine which is low information search about the company. Therefore, we expect major change within the next three year upon the factors we mentioned above.

Segmentation:

As for segmentation we expect to see a rise in the population of the UAE in the following 3 years. According to the electronic portal of Gulf News the population of UAE is approaching six million as of now and it is expected to escalate even further by the end of this year. An increase in construction in the coming years requires more labor to be imported from foreign countries, thus increasing the number of potential customers (low income and middle-class lifestyles) who might want to use our services. Moreover, economic boom can also be a factor for businessmen to travel to and from Dubai more frequently. In addition, the number of students travelling to the UAE for education is expected to increase in the near future; this implies that they will most probably select Flydubai as their primary mode of transport to travel to and from the UAE, since the economic condition shows very little signs of improvement in the near future.

More tourists are expected to arrive in the UAE within the near future out of which a section of them are extremely price sensitive travelers.

Another scenario would be that the current economic downturn continues to effect economies world-wide within the coming three years increasing the number of price-sensitive customers in the eight markets we operate in.

To keep up with the projected demand, Flydubai is planning to increase its fleet size from 5 (currently) to 54 aircrafts in the coming years. An increase in fleet size would allow Flydubai not only to accommodate a large number of clients but also expand its reach in terms of destinations.

Conversely, the announcement of the new GCC rail network which is the new transportation class in our relevant market is expected to have a slight negative effect on Flydubai’s operations in terms of loosing clients that fall in our target segmentation. The GCC rail network and Flydubai have one common destination which is Qatar. Once the GCC rail network begins its operations there is a high possibility of losing out on our current and potential clients. (For more information on segmentation please refer to appendix 5).

Competitor analysis

Our major competitive in our relative market is Air Arabia and then Al Jazeera Airlines. Air Arabia is holding major market share because they are the first to claim about launching first low cost airlines in Middle East region. However, Flydubai can compete with those two direct competitors when we focus on our competitive advantage which is price leadership. Also, location is another important factor due the number of travelers that are using Dubai Airport comparing to Sharjah Airport. In addition, being part of the Emirates Group will add more value to Flydubai brand equity which will make it easier to make customers shift toward our company within the next three years. (For more information on competitor analysis, please refer to Appendix 6)

Conclusion:

In conclusion after analyzing the environmental micro and macro trend for Flydubai, we observed that there are two major changes in our relevant market. First, the increase of the tourism level in Dubai as we expect the current economic downturn era to change its direction towards positive figures in the next three years. Also, the companies’ holders and businessmen attitude towards low cost airlines is changing by using it as these airlines are providing business men services aboard such a business class and wireless internet connection. The number of competitors within the low cost airline industry is going to increase in the coming years as new airlines such as Bahrain Airlines starts its operation this year. Secondly, full service airlines are expanding their market towards low cost airline by introducing low price tickets that attract price sensitive consumers. We expect that within the next ten years a new class level will enter the market in the GCC region which is trains transportation. Also, a new form level will emerge in the relevant market which is a combination between full services and low cost carriers. Finally, within the next three years we expect those changes in the relevant market to be reshaped affecting the primary and selective demand.

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Appendix 1
Back Ground information on Flydubai:

Flydubai is the UAE second low cost airline that was established in March ,3rd 2008 on the orders of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai. The company first flight was in June 1,2009 to Beirut in Lebanon followed by flights to Amman, Jordan, on June 2, Damascus, Syria, on June 8 and Alexandria, Egypt, on June 9, giving the new airline a total of four destinations in just nine days. (Redpath, 2009).

The company had ordered 50 Boeing 737 and is going to receive 10 airplanes each year for the next five years. (Flydubai,2009) Currently the company runs its operations in Dubai International Airport terminal 2 that was redesigned for the new airline.

Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of Flydubai said: “This region is very dependent on air transport. It is a great credit to the vision and leadership of Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, that this airline has now taken off, thereby ensuring residents and visitors alike will be able to travel to more places more often.” (Redpath, 2009).

The Flydubai model is simple, with customers only paying for the services they want. The ticket price includes all taxes and one piece of hand baggage, weighing up to 10kg, per passenger. Passengers have the option to purchase checked-in baggage in advance at just 40AED for the first piece and 100AED for the second, weighing up to 32kgs, subject to availability. Checked baggage is strictly subject to availability and passengers are advised to book early to secure the space, as only pre-purchased baggage can be guaranteed. (Redpath, 2009)

“Flydubai aims to make travel a little less complex, a little less stressful and a little less expensive,” explained Flydubai CEO Ghaith Al Ghaith. “Our passengers have the option to customize their travel experience depending on what services they want and how much they want to pay. (Redpath, 2009)

“We plan to stimulate the markets in which we operate and encourage people to travel to more places more often. Flydubai aim is not to drive traffic away from the other carriers but to help grow these markets. When you consider that low cost travel in this region could be as little as 2% of all air travel, as opposed to more than 20% in Europe and America, it is clear that there is a lot of untapped potential in these markets. (Redpath, 2009)

“In addition, Flydubai will fly to airports that are currently underserved by the traditional carriers. In a region which is so dependent on air transport, we are looking forward to providing the reality of accessible, low cost, uncomplicated travel” (Redpath, 2009).

Appendix 2:
Product Market Structure:

The above market structure was used to identify Flydubai relevant market within the airline industry in the Middle East region. We started the structure with the most basic need which is the need to travel in the region. This provided us with three alternatives that include airplanes, buses and cars. The product form is divided between full service carriers and low cost carriers as they differentiate in prices and services being offered to customers. From this structure we can identify Flydubai relevant market within the product form level. This is because the degree of competition and substitutability within the brand suppliers are high, as they all offer low prices with similar routes within the region. This push the relevant market upwards towards the product form level. Furthermore, Flydubai indirect competitors include Fly Emirates, Etihad airlines and Saudi airlines. These full service airlines are competing with Flydubai indirectly by providing low prices with full services. On the other hand our direct competitors include Air Arabia and Al Jazerra airlines that are both low cost airlines that perform within the region. Further explanation on competition will be provided in the Micro analysis in the competitors section.

Appendix 3
Macro Environment:

In studying the external environment of Flydubai in the next three years we will focus on the Macro and Micro environment. This study will help us in finding out the effect of these external factors on the company in the next few years.

The Macro environment factors will include Political, economical, social and technological aspects under which Flydubai will be affected by.

1) Political Analysis:
A) Government Regulations:

Flydubai was established with orders of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai. Being owned by the Dubai government the company faces no difficulties in laws and regulations as the airline industry in the Emirates is booming through the process of liberalization the airline industry that the United Arab Emirates is adapting.

B) Political Analysis:

In studying the overall political environment of the United Arab Emirates, we find it one of the most stable countries within the region. Such political approach of peace seeking had made the country a trading hub in the region. This will certainly have its positive effect on flydubai operations as to perform in stable political environment.

C) Employment Laws:

Protecting labors rights and Emiratization is considered the main aspect that the UAE government is taking into consideration now a days. Companies are now forced to have a certain percentage that of emirates locals that will increase in the following years as there is more emphasis on employing locals in the private sector. Being a part of Emirates Airlines Group, Flydubai will certainly adapt its mother company in hiring and training locals in suitable jobs. The challenge that Flydubai will going to face is to decrease costs in one hand and provide well paid jobs in the same time .

2) Economical Analysis:
A) Inflation Rate:

“The inflation rate in the UAE is predicted to fall from last year’s 11.1 percent level to seven percent in 2010, according to a new report.” (Sambidge, 2009). This is considered a positive aspect for Flydubai as it will have its positive effects in reducing the company costs in oil and ground operations. High inflation rates reaching to 11 percent last year was a threat to low cost airlines such as Air Arabia and Al Jazerra Airlines that faced a problem of high oil prices. This good news will make Flydubai compete even stronger on prices as inflation rates goes down.

B) Economical Analysis:

“Falling oil prices, cooling real estate and construction markets, together with a slowdown in the tourism sector, especially in Dubai, means the UAE is expected to post low or possibly negative GDP growth in 2009, according to analysts. (Sambidge, 2009). Living in the current World Financial Economic Crises the UAE economy in general and Dubai in specific faced a hard time in 2009 but analysts forecast that there will be more positive figures in 2010. This information is considered a negative too many airline companies but may be positive to Flydubai as people are now more focus in reducing their expenses as the incomes are reduced. This means their tendency of consumers focusing more on prices which is a positive thing for a low cost airline. Additionally, analysts forecast that the economy will grow in 2010 again and this will certainly have its effect on the company growth.

3) Social Analysis:
A) Demographics:

More than 300,000 people will be added to the UAE population this year to record the highest growth of 6.3 per cent in five years and Dubai would likely emerge as the fastest growing emirate, official figures show. The rise rebuffs reports that the global financial turbulence has triggered a mass exodus of expatriates out of the country, mainly Dubai.

From 4.75 million in mid 2008, the UAE’s population is projected to increase to 5.066 million in mid 2009, showed the figures by the Ministry of Economy. This figure are going to increase in the next few years which will certainly have its positive effects on the airline industry in UAE considering that expatriates make an approximate percentage of 80.1 of the above figure in 2009 according to the ministry of economy.

Furthermore, the figures show that the 25-29 year age group was the largest in the UAE in mid 2008, standing at 777,186. It was followed by the 30-34 age groups, which was estimated at 754,289 and 35-39 groups of 588,505. This clearly indicates that most of the population is young and is going to shape the tourism and aviation market in the next couple of years.

B) Consumer Behavior:

According to a study done by Arabian Business website, it was found that 83 percent of the respondents would switch their preferred airline carrier, for a cheaper price, while 17.6 percent believed they would consider alternatives and trade off between the discount and lost air miles. It can thus be inferred that pricing plays a significant role in consumer behaviour and the decision making process especially in the current economic downturn era. Furthermore, customer loyalty in the low cost carriers is low as it’s directly related to price. Flydubai should consider this into account and introduce customer loyalty programs in order to maintain a higher level of customer loyalty. (Glass, 2008).

C) Leisure Interests:

” 3.85 million tourists had visited the emirate in the first half of 2009, a five percent increase on the same period of 2008? According to Dubai department of Tourism and commerce marketing . This figure strongly shows the current tourism industry market and how attractive it became even though of the current economical downturn. Other figures expect that the number of tourists will fall compared to 2008 figures but most figures have stated that there will be a positive growth in 2010.

D) Career Attitude:

Business travelers are changing their perception of low cost carriers. As observed by Andrew Cowen, CEO of Same, the market is shifting from the traditional major airlines business travel towards low cost carriers for trips within the GCC. This changing attitude, supported by the current economic downturn and the increase number of foreign businesses within GCC countries entering the UAE, shows a trend of an increasing demand for low cost carriers in the next three years. (High time for low cost carriers, 2008).

E) Technological Development Analysis:

Following its mother company Emirates Airlines, we expect that Flydubai become a market leader in providing advanced technological solutions to its passengers by using the large experience that emirates airline have. If such direction was adapted, it will certainly provide the needed strength that Flydubai need in competing with its direct and indirect competitors.

Appendix 4
Micro Environment:
Stakeholder Analysis:

This means to analyze the micro environment which includes the following factors: the customers, employees, shareholders, media, and the competitors.

A) Customers:

Customers who are price conscious are concerned with low cost airlines. Flydubai has focused on pricing strategy and flexibility because these two factors play a big role in determining the customer’s decision process on which airlines they choose to travel with. Price strategy and flexibility of Flydubai include low pricing strategy and easy booking with increased choices. As Sheikh Ahmed bin Saeed Al-Maktoum, Chairman of Flydubai said: “As a true low cost airline we are geared towards providing our passengers with the best price and increased choice. We will operate efficiently and continually evolve to deliver the best possible product to our customers”. (“Flydubai opens for,” 2009). The cost of Flydubai from Dubai airport to Doha airport would cost 200DHS, whereas other major airlines such as; Emirates or Qatar airlines would cost approximately 1000 or more for a one way ticket (“Flydubai home page,” 2009). This shows that Flydubai is much cheaper and has managed to keep prices low due to the successful use of their pricing strategy.

Moreover, the number of tourist from around the world including the region will grow more than 40% in the next 3 years in Dubai (“Number of tourists,” 2009) .This shows that there will be increased number of customers who will use Flydubai airlines within the next three years due its successful use of pricing strategy and flexibility.

B) Employees:

Flydubai airline has received more than 11,500 applications from flight and cabin crew. There are 18 first officers, 61 captains, and almost more than 8000 candidates for pilots were selected from twelve different nationalities (Sambidge, 2009). The staff has good experiences and was carefully selected. According to Kenneth Gile, chief operating officer of Flydubai said: “We are extremely pleased with the talent of the pilots we have on board. On average, they each have more than 4,000 hours serving as captain in similar aircraft and a total experience of more than 8,000 flying hours – this is impressive by any standard” (Sambidge, 2009). Furthermore, employee and staff hospitality is very important. This is because the employees and staff were selected from twelve different nationalities and they need to feel comfortable with the new culture they are facing in order to work efficiently.

D) Shareholders:

Flydubai is fully owned by the government of Dubai and its considered as a part of its mother company the Emirates Group. The company has no other shareholders currently as there its 250 million dirham’s capital is completely raised by the government.

E) The media:

Obviously, through observations, Flydubai has made many advertisements through publicity such as; Newspapers (e.g. gulf news) and internet websites. However, the main strategy they used or willing to use for their marketing strategy is through word of mouth (buzz). Since Flydubai is a low cost airline, they tend to set low budgets for their advertisements to keep their prices low. So the best way to conduct an advertisement method for low cost carriers is through word of mouth. (This information is based on analysis due to facts and observations).

Appendix 5
Primary demand:

After making the environment analysis for the next three years and studying the current market conditions, we identified Flydubai relevant market at the product form level. This is because there is a high competition within the brand supply level forcing it towards the product form level as they all offer low prices with similar destinations. After the financial crisis, we noticed a shift toward low cost airlines as incomes had decreased. This had its effects on the following primary demand elements that include:

Buyer Identification:

The number of customers using the LCC airlines is recently increasing (www.gulf-daily-news.com). Users of LCC

“…soft ecotourism often occurs on a large scale within certain accessible areas leading to the observation that ecotourism can and often does occur as a form of mass tourism…’ (Weaver and Lawton, 200: 362). Critically evaluate, using examples, the social, economic and environmental impacts of mass tourism on ecotourism sites.

From my studies and research in this subject area of geography it is evident that there is a link and indeed a relationship between ecotourism and mass tourism. In order to understand this relationship however we must take into account what exactly tourism means, and subsequently what is meant by ecotourism and mass tourism. What essentially is tourism? Undoubtedly there are many varying definitions to describe tourism but essentially tourism “. . . is the temporary movement of people to destinations outside their normal places of work and residence, the activities undertaken during their stay in those destinations, and the facilities created to cater to their needs” (Alister Mathieson and Geoffrey Wall 1982, p.1) Tourism is unquestionably a leisure activity and there are many various forms of tourism including;

Cultural tourism.
Sex tourism.
Adventure tourism.
Geotourism.
Event tourism.

The tourism sector has experienced significant increase in later years due to higher incomes and greater transport amenities and accessibility. According to the Central Statistics Office Ireland website, www.cso.ie the number of trips by Irish residents on domestic travel has increased from 7,001 in 2004 to 8,340 in 2009. [1] The increase or enhancement of tourism within certain areas has varying impacts, both positive and negative, on the economic, social and environmental aspects.

Ecotourism or ecological tourism essentially refers to travel to an area possessing natural, physical or cultural beauty for example rivers, beaches, mountains and wildlife ecosystems. The main purpose associated with this form of tourism is to maintain, protect and respect the value of the area. According to Mike J. Stabler et al, ecotourism refers to “. . . a sustainable, non-invasive form of nature-based tourism that focuses primarily on learning about nature first-hand and which is ethically managed to be low impact, non-consumptive and locally orientated (control, benefits and scale). It typically occurs in natural areas, and should contribute to the conservation of such areas.” (Mike J. Stabler et al, 2010, p.360). Ecotourism incorporates a wide range of activities from visits to natural ecosystems for example the Great Barrier Reef in Australia, physical activities such as mountain climbing and visits to see wildlife animals for example gorillas which I will discuss later in this essay. There are two main types of ecotourism; soft ecotourism and hard ecotourism. Soft ecotourism is generally the more popular form of ecotourism and usually involves short-term experiences which are nature led by a tour guide and in which the individual returns to a facilitated area. Due to the popularity of soft ecotourism it is more likely that mass tourism could develop as a result. Hard tourism on the other hand refers to the individual involving themselves in an intense experience devoid of amenities like accommodation, restaurants and shops for example The Hollies Centre in County Cork.

Mass tourism can be quite difficult to determine as there are no insights as to how many tourists would classify as mass tourism. However it fundamentally refers to large scale tourism where there is a great or large amount of tourists in a given area at any one time. Mass tourism has come to the fore due to higher incomes and accessibility as previously mentioned and in addition to these the introduction of package deals has also played a vital part in this form of tourism. It is essential to note that there is a relationship between these two forms of tourism and one can influence the other hugely. Throughout this essay I will discuss the impacts, socially, economically and environmentally of mass tourism on ecotourism sites with reference to various examples.

By controlling and managing potential mass tourism on an ecotourism site the negative social and environmental impacts are significantly reduced, ensuring the overall preservation and conservation of the site. Rwanda is a small country which is located in central Africa and is famous for its beautiful geographical scenery such as the scenic beaches at Lake Kivu and its vast series of mountains. In addition to the beautiful scenery, it also boasts an abundance of wildlife including various species of birds and the rare mountain gorillas. (Figure 1) Rwanda is known worldwide for these mountain gorillas and this undoubtedly is a main attraction for tourists. According to the Rwanda Tourism website, www.rwandatourism.com, the number of visitors in Rwanda increased from 826,374 in 2007 to approximately one million in 2008. [2] In addition to this gorilla tourism in Rwanda has grown significantly and reached a peak in 2008 when 17,000 tourists were recorded visiting the Volcanoes National Park alone (Neilsen, H. and Spenceley, A. 2010, p.2.), with peak season being the months of July and August. Although the increase in Rwanda’s tourists would not be classified as mass tourism on a global scale, it is essential to note that this increase has had significant impacts in Rwanda. The Volcanoes National Park is located in northern Rwanda and lies on the border of Virunga National Park in the Congo and the Mgahinga Gorilla National Park in Uganda. The Volcanoes National Park enables tourists to experience the extraordinary gorillas up close. The level of tourism certainly has impacts on the ecotourism site socially, economically and environmentally.

The local community in Rwanda has experienced both positive and negative impacts as a result of the increase in tourism. In relation to social impacts Rwanda has undoubtedly benefited. The income received in the country as a direct result of tourists in the park has meant that the local communities have socially grown. Under the ORTNP and with the support of the government, a tourism revenue scheme was initiated in 2005, meaning that 5% of revenue from park fees goes towards supporting local communities and projects. The following are examples of projects undertaken in Rwanda as a result of the revenue scheme;

Schools; the construction of ten schools within the locality has dramatically cut down on travel time for locals to school. This enables pupils to focus on their studies, thus improving the quality of education in the area.

Water Tanks; over 5,000 families within the locality have benefited from the construction of water tanks which provide 20,000 litres of water per person per day.

(Neilsen, H. and Spenceley, A. 2010, p.11)

The Rwandan community possesses a rich cultural society which is present in their arts and crafts for example woven baskets, pottery and painting. Tourist expenditure on such cultural crafts shows interest in local traditions and rituals and ensures the native culture survives amongst the varying cultures of tourists. Environmental impacts are a considerably important feature when referring to gorilla tourism in Rwanda. Due to the fact that these mountain gorillas are rare and endangered species conservation and protection of these animals is a priority. One can argue that tourism itself can have a detrimental impact on the animals and this undoubtedly is a fair argument. Gorilla tourism can and does present a threat to gorilla conservation as tourists can put stress and disturbance upon the gorillas. This can adversely affect the behaviour and health of the gorillas. (Neilsen, H. and Spenceley, A. 2010, p.16) Evidentially these factors could be responsible for a decline in population size. However, as people in Rwanda have realised the potential danger, they are now managing mass tourism in the following ways in order to conserve the eco-site;

Anyone who wishes to take part and experience closer contact with the gorilla species must purchase a permit which is expensive and limited. Tourists are willing to pay high prices for these permits and this essentially means that tourists are aware of and are supporting the ecotourism code of minimising ecological impacts.

In addition to the high cost of permits and as briefly mentioned earlier, the revenue scheme means that 5% of this money is fundamentally re-invested back into the conservation and protection of the national parks.

A set of rules and regulations have been introduced which prohibit risk to the gorillas. These rules are enforced by staff employed within the park. The following are some examples of rules and regulations enforced;

Tourists have to keep a distance of 7 meters between themselves and gorillas.

There is a daily limit of one group of tourists per group of gorillas, a limit to the number of tourists within that group and they are required to remain together.

Visits are to have a limited time span of one hour.

Minimum age requirement of 15.

(Neilsen, H. and Spenceley, A. 2010, p.4)

If we are to imagine this ecotourism site without any means of managing tourist numbers what would be the impacts environmentally? Undoubtedly the gorilla species in the Volcano National Park would become extinct. The population of the gorilla has already decreased in recent years and there is no question that extensive large scale tourism (larger than what Rwanda is currently experiencing) would decrease it even more. In terms of economic impacts with reference to tourism in Rwanda we can see that tourism is acting as an economic asset to the local communities. Employment in gorilla tourism is very significant and at least 180 employment opportunities have been created within the park including tour guides, anti-poaching teams and gorilla groups’ trackers. (Neilsen, H. and Spenceley, A. 2010, p.12)

Benidorm is a coastal town situated in the province of Alicante in Spain. It is home to beautiful sandy beaches which attract numerous tourists every year. Originally prior to the 1960’s it was a small village where farming and fishing were the main sources of income. During this time period Benidorm experienced little or no tourism.

Since then however Benidorm has developed tremendously and attracts as much as ten million tourists per year. As a result of this dramatic change the lives of the local people and indeed the landscape have changed dramatically. Tourists are attracted to Benidorm due to easy accessibility, cheap package deals, abundance of accommodation, the beautiful sandy beaches, nightlife and golf courses. The town of Benidorm developed rapidly in order to cater for this large scale tourism and this development has had social, economic and environmental impacts as a result. The construction of tourism related infrastructure has negative environmental impacts in the vicinity of Benidorm. Over consumption, over development, pollution and artificial reconstruction are amongst these negative impacts. Many high rise hotels were constructed in order to cater and maximise tourism within the town which immediately diminishes the beauty of the town and decreases attractiveness.

Pollution is an ongoing problem in the area. Tourism leads to extreme litter and extreme pressure on sewerage systems. Cheaper package deals have led to an increased level of air travel, thus increasing the levels of nitrous oxide, hydrocarbon and lead in the air. Over consumption of natural resources for example water is another negative impact of tourism in Benidorm in the past with tourists exploiting the resource in hotels and swimming pools. Reconstruction of beaches, and production of golf courses decreases originality, portrays a modern town and drains images of the picturesque fishing village that was once there. (Figure 2) According to an article on the BBC news website however, www.bbc.co.uk/news/ , Benidorm is now highlighted as the new face of ecotourism. The author describes the recent environmental positive impacts which were acknowledged and have occurred as a result of the initial negative impacts of mass tourism. In one hotel the lights immediately turn off upon vacating the room and many of the taps are foot-pump operated in order to save water which in turn tackles the overconsumption of the natural resource. In addition low energy street lighting is used. In relation to the economy of Benidorm there are both positive and negative impacts. The tourism industry is worth an impressive amount to the economy and is a vital asset in terms of job creation. The restaurants, pubs, hotels and shops employ a large amount of people from Benidorm and the surrounding areas which would perhaps be unemployed if it was not for high tourism levels. The majority of food is locally sourced which essentially means that money earned by local businesses is essentially going back into the local economy. However tourism in this town has negative impacts also. Many of the hotels in Benidorm are chain hotels and are foreign owned. This acts as a drain on the local economy as money leaves the country. The cost of living increased as a result of mass tourism with prices of houses and goods and services putting pressure on the locals. Socially, the huge numbers of tourists visiting Benidorm has resulted in a wide range of cultures which can have has both positive and negative effects. The wide multicultural society as a result of mass tourism indeed positive yet this can have strongly influence negative impacts. It can simply drown out the Spanish culture of the town and with such a diversity of cultures anti-social behaviour has occurred and remains a possibility when misunderstandings or insulting of different cultures occurs. In addition to this mass tourism can have adverse impacts socially for the locals. Mass tourism has led to a rise in inappropriate behaviour with tourists engaging in such activities as drug use and excessive drinking. Tourism also interrupts local access to amenities such as shops, roads, public parks and sporting facilities as well as public transport.

From the examples I have discussed throughout this essay it is evident that there is indeed a relationship between the two forms of tourism- ecotourism and mass tourism. In relation to my two examples, gorilla tourism in Rwanda, Africa and tourism in Benidorm, Spain, it is essential to note that I took two different approaches in terms of discussing them. When referring to ecotourism in Africa, I discussed the impacts that managing tourist numbers has had on the ecotourism site. It is evident from this example that ensuring the impacts of tourism numbers on this destination are monitored and managed is vital for sustainable tourism industry. Without the management gorilla numbers would decrease and would eventually become extinct. Therefore the ecotourism site would not be viewed as a must-go destination and tourism would possibly cease. With specific reference to the tourist destination of Benidorm in Spain, I discussed the impacts which mass tourism had initially created on the area. In contrast to this, in more recent years I have given an insight to how Benidorm has evolved from an area of mass tourism to an area portraying potential eco-touristic qualities. Tourism management in a destination that is in line with local communities preserves and enhances the environment and protects its wildlife, while providing a more authentic tourist experience and eliminating the negative social and environmental impacts of mass tourism on ecotourism site.

ABSTRACT:

The hospitality sector presents a variety of environmental aspects that, depending on the activity, may have a significant impact on the environment. Its users are consuming resources such as energy and water on a daily basis and generating a great deal of solid waste and effluents. The hotel industry, banking sector and hospitals are examples of some of the sectors that provide us with more information on this issue. This work discusses the main environmental impacts generated by the hospitality sector and highlights the possible environmental strategies that can lead to improvements in environmental management in this particular activity.

INTRODUCTION:

Most people are aware that there is a need for all of us to take care of the environment, if we are not to threaten the ability of the earth to support future generation. Some aspects of the environment are very obvious from our day to day lives, such as increasing traffic levels, together with the associated air pollution and loss of green belt. Environmental issues, particularly the relationship between our actions and the environmental impacts in terms of primary, secondary and tertiary effects. ( Kirk 1996).

Environmental impacts is a study of all the factors which a land development or construction project would have on the environment in the area, including population, traffic, schools, fire protection, endangered species, archaeological artefacts and community beauty. In another way possible adverse effect caused by a development, industrial, or infrastructural project or by the release of a substance in the environment. This also increases the need of sustainability development. It is a development that meets present needs without endangering the ability of future generations to meet their own needs. Sustainable development is contrasted with other modes of development that lead to social and ecological damage, at both the local and global levels (Harris et al 2002). According to Jan Peter Bergkvist, Director of Environmental Sustainability, Scandic xix. “There are three prime reasons for putting effort into sustainability: first, it preserves our environment for future generations; second, it adds that extra dimension to guest satisfaction, which in turn makes us a more attractive company; and third, it saves costs and improves profitability.”

AIM:

The aim of the position paper is to critically analyse and discuss the environmental impacts and its effects on the hospitality industry. This position paper will also explain the various positive and negative effects of environmental impacts of the hospitality industry and the methods, strategies adopted to control them.

MAIN BODY:

TOURISM, HOSPITALITY AND THE ENVIRONMENT-

To say, an environmental impact is the negative aspect of human activity on the biophysical environment. Increasingly consumer attitudes are favouring environmentally responsible businesses. This has extended to travelling where consumers are considering environmental issues when making travel plans and purchases. A reflection of this is seen in the growth of ecotourism, which has grown by 30% worldwide in recent years compared to 8% for traditional tourism. The Conference Board of Canada’s long term forecast shows that the accommodation industry will experience an annual growth of approximately 3% between now and 2015 (Eco efficiency centre). This arises sustainability development in the hospitality industry also. The concept of sustainable development has been expanded to cover seven key aspects. They are futurity, inter-generation equality, participation, the balancing of economic and environmental factors, environmental capacities, emphasis on quality as well as quantity and compatibility (David kirk). Environmental pressures have affected a much wider range of industries. Initially the concern was related only to the industries which caused direct pollution of the environment. But now it has become a wider issue and relates not only to the outputs but also to the whole operation. The hospitality industry also becomes a core industry to be discussed in this issue of environmental factors, as it exposes many of the conflicts which arise in implementing environmental policies. Many hotels and restaurants are situated in the areas of outstanding natural beauty, in historic cities and in regions with a delicate ecological balance. So there might be a question whether this addition of new facilities will destroy the uniqueness or its habitat which is already suffering from too much of development and tourism. But the hospitality industry is linked with various other industry which cooperates together to bring in a successful business which is mainly focused on profit. The hospitality industry is also a major customer oriented industry. So we must also consider customers, many of whom seek as part of the hospitality experience to be pampered with lashing of hot water, high pressure showers, freshly laundered linen, an ample supply of towels, copious supplies of food and drink, the availability of swimming pools and saunas and the limousine to take them to the airport. Whatever we do to reduce the environmental impact of hotels can only be either with the consent of customers or taking the main consideration as customer satisfaction. Many hospitality organisations are situated on a location were that is suitable for the customer or according to the customer needs. And it is therefore not situated in a place where there will be minimal effects from traffic, cooking smells and the noise of the disco and other adverse outputs. This kind of local pollution is not considered to be a big issue, but it does affect people’s attitudes towards the industry (David kirk).

The hospitality industry does not cause gross environmental pollution nor it consume vast amounts of non-renewable resources and therefore it may not be in the front line of environmental concern. The industry is made of relatively large number of small operations, each of which consumes relatively small amounts of energy, water, food, paper and other resources, and which add only a small amount of pollution to the environment in terms of smoke, smell, noise and chemical pollutants. The industry employs 10% of the population and can have a major impact in developing awareness and good practice (David kirk). According to Goodno “the push of legislation and the pull of consumer pressure groups, compounded by the cost savings which can result from reducing waste, many companies are now taking environmental management seriously”.

The main environmental impacts due to the hospitality industry are CO2 emissions, CFC emissions, noise, smoke, smells, health of staff, waste energy, waste water, waste food, waste disposal, agricultural ecology, purchasing policies, transportation policies, sale of souvenirs made from endangered species, location of hotels in fragile locations. According to the Annual report of the world travel and tourism environmental review “there is a recognition that environmental issues will become much more prominent as a factor which influences consumers, regulators, pressure groups and destinations and that the tourism industry will need to show increasing concern for these issues. The WTTC have developed a strategy, known as the “GREEN GLOBE”, in order to promote environmental management among hotel and travel environment. These vary from waste management to the development of eco-hotels and the classification of hotels on the basis of environmental impact (David kirk).

Environmental impacts of the hospitality industries-

Positive impacts

It sometimes educates the public about the local environment and the importance of protecting the environment, eg the Great Barrier Reef.
The tourism and hospitality industries often create employment and business opportunities in an area, contributing to the local economy.
Hospitality and tourism buildings and venues are being designed and/or redesigned so that their impact on the environment is reduced and they merge in with the local environment better.
Many enterprises are now employing more sustainable practices in order to promote a green image that appeals to consumers, eg using organic products, recycling, using less toxic chemicals and using more energy and water efficient fittings.

Negative impacts

The presence of buildings and tourists may destroy the local environment and habitat of native animals.
The hospitality industry contribute to waste issues, eg food scraps, oil and chemical disposal.
Many hospitality venues are noisy.
The hospitality and tourism industries consume a lot of energy and water, eg electricity for air conditioning, refrigeration (www.hsc.csu.edu.au).

The environmental impact is broadly classified as:

ASETHETIC IMPACT
CULTURAL IMPACT
ECOLOGICAL IMPACT
SOCIAL IMPACT
POLITICAL IMPACT

Aesthetic impact means causing destructive image of a surrounding by various factors such as development etc. The image of a destination possesses importance from a practical marketing perspective for many reasons.

Often hospitality industry fails to integrate its structures with the natural features and indigenous architectural of the destination. Large, dominating resorts of different design can look out of place in any natural environment and may clash with the indigenous structural design. A lack of land-use planning and building regulations in many destinations has facilitated sprawling developments along coastlines, valleys and scenic routes. The sprawl includes tourism facilities themselves and supporting infrastructure such as roads, employee housing, parking, service areas, and waste disposal (www.gdrc.org). Examples include lakes around Rotorua, New Zealand, that have suffered from blue-green algae and, on occasion, have been closed for recreational activities (Journal of sustainable tourism).

The Environmental Impact of Tourism in RomaniaIntroduction

In this essay the main attention will be focussed on the impact of tourism upon the environment in Romania, so the positive and the negative aspects of tourism will be brought in discussion. In Romania the environment is a factor influencing tourism demand. Given that the demand for products of interest is partly determined by its quality, the environment can have a positive or negative impact on tourism.

Tourism-environment relationship is particularly important, protection and conservation of the environment being the primary condition for progress and development of tourism. This link is complex; it is manifested in both directions. The environment is defined as the quality of life of people living and natural environments suitable habitats for animals and plants.

The impact of tourism on the environment

The positive impact

Tourism is one of the most important industries and has developed continuously. Romania is visited by more people which are interested in exploring new destinations and cultures as distant. Thus, areas having special natural resources attract more visitors, especially if they offer the opportunity to know the customs and traditions of other cultures.

When tourism and environment coexist in harmony, environment benefits from tourism. There are many examples of this kind, most falling into one of two types: conservation and environmental rehabilitation. Preservation means keeping informed choice and use of the natural and anthropogenic. Conservation and tourism often go hand in hand. In Romania many historical and archaeological monuments have been saved from destruction because of tourist interest to them.

In Romania parks and nature reserves managed to protect many species that would otherwise have been destroyed by uncontrolled hunting. Tourism not only provides a reason to preserve the environment from man, but also provides money for conservation: a share of the income from tourism can be used to preserve the environment. In this tourist from all over the world are involved in different touristic programs like hiking the trails of medium and high difficulty , visiting historical monuments and palaeontology, easy routes to points of Belvedere, and Keys resort to Rausor Buti, trails for ski touring, climbing routes, programs for the study / observation of flora, bird watching and observation traces animals.

Conservation implies preservation of the environment in a form as close to the original, rehabilitation involves a major change in the use environment. Many buildings and tourist areas have been saved by being restored as tourist attractions or tourist accommodation.

Many buildings and tourist areas have been saved by being restored as tourist attractions or tourist accommodation. Many factories in Romania began a new life as museums, industrial areas were converted into places of festivals, a variety of impressive castles and houses that were in decay became accommodation for tourists. Such examples show how the environment can benefit from tourism, saving what would otherwise be lost entirely.

The most important natural reserve from Romania, natural monument, internationally recognized as a Biosphere Reserve is Retezat National Park. The park contains many touristic attractions such as over 80 lakes, 20 peaks over 2000m, the most extensive and deepest glacial lake in Romania, more than 54 habitats of rare or vulnerable plants and animals, glacial relief in the north and caustic terrain in the south. In this reservation tourist from all over the world are involved in different touristic programs like hiking the trails of medium and high difficulty , visiting historical and paleontological monuments, light trails to points of Belvedere, ski at Rausor and Cheile Butii, climbing routes, programs for the study and observation of flora, bird watching and observation animal trails.

Another international known touristic attraction from Romania is the Danube delta. Tourists from all over the world choose the Danube delta as their holyday destination because of its unique landscapes and habitats. This has a good impact upon the natural reservation, because foreign tourists help raising the money for modernising and maintaining the many and diverse natural habitats in the delta.

The negative impact

Tourism is a consumer of space and tourist resources, participating default degradation and environmental pollution and tourism potential. This degradation is carried out either by direct pressure of tourists on the landscape, flora and fauna and other tourist attractions on which tourism can partially or totally damaged or recovery by the misconception of some areas, points and tourist attractions. Human pressure on the natural environment increases day by day, people moving more often and longer distances on the past. Leisure offers greater opportunity in the exploitation and conquest of the natural environment, most free time is spent outside the city, in nature. Periodic output of the city to green areas – in the form of tours, a weekend or holiday sites – has become a social custom with negative environmental effects. Many of the environmental damage caused by tourism are caused by the large number of visitors arriving at destinations whose optimal reception capacity has been exceeded.

Environment rarely escape harm when the number of tourists is very high. Air and water quality and diversity of flora and fauna are inevitably affected in some way, and landscapes, cities and monuments. Movement of uncontrolled tourist sightseeing done in natural or anthropogenic causes of often irreversible destruction of some of the items they have devoted to tourist attractions (the destruction of vegetation and flora, breaking trees and especially juveniles, poaching, degradation of the landscape). Pollution is increasing and because of the nature of automobile tourism whose deleterious effect is alteration of air quality, destruction of grasslands, trees and flora, etc… Another way of environmental degradation is the purpose of investment unscientific and irrational nature tourism, investments take the form of: over-dimensioning stations in terms of reception and treatment capacity, failure of general principles of natural resource exploitation.

An example showing the mutual relationship between tourism and environmental complex in general, and the negative impact that it manifests on each other, in particular, is the disappearance of the last 20 years to 14 huts in the Romanian Carpathians, the loss due to fire. Such damage is due to negligence of tourists.

Conclusions

Through this essay it has been showen that tourism has much more negative impacts on the environment of Romania than positive ones and that they are often closely related to the economical aspect of tourism.

In conclusion Romania is a country enjoying a natural setting with great potential and infrastructure often enough natural tourism, travel form, in this view, is less demanding

.

After research, results that Romania does not benefit by much more positive aspects, since many components of the environment have been destroyed by tourists, rather than preserved. As Romania has much to do about environmental preservation.

References:

Cooper et al, C., (1998) Tourism Principles and Practice, 2nd Edition. New York: Addison Wesley Longman Publishing

Cooper et al, C., (2005) Tourism Principles and Practice, 3rd Edition. Harlow (Essex): Pearson Education Limited

http://www.plural-magazine.com/article-the-danube-delta-eco-tourism-museum-center-in-tulcea.html

Retezat National Park

Antarctica is certainly most exclusive place on earth. People have travelled and visited almost all the parts of Antarctica for more than hundreds of years. The issue here is whether the frequent visits of tourists have put into question the sustainability of tourism in this area. Antarctica is being used by various scientists to carry out research and experiments to determine climate, weather, and oceanic features in the rest of the world. Even though the expenses to visit this place is very high, people don’t mind this factor as it is a lifetime experience for them.

The author argues that the increase in tourism in Antarctica has led to the increase in the risk to the marine environment, terrestrial ecosystems and also has affected the national research programs. The species like penguins have started migrating to other locations from their usual spots because of the human species. The main access for the tourists to this place is with ships, which are not properly equipped and some of which have led to accidents resulting in oil spills. The oil spillage has put many species in the threat of being extinct.

The problem is that how to make this tourism sustainable with reference to the ecological importance of the area. For this, the author puts forward few solutions, such as there should not be any resorts or hotels constructing on the shores of this area, as it affects the species around. These hotels and resorts dump a lot of wastes into the sea which spoils the water too. The government of Newzealand has made it compulsory for a government official to accompany the tourist’s ships to check whether they follow proper rules and regulations.

As we know, it is difficult to keep an eye on the activities of tourists in these areas, but it is expected that a few more steps like above would make tourism sustainable in Antarctica.

Article 2: Engagement with the private sector for sustainable tourism in the Great Barrier Reef Marine Park

(Source: Report for Global Ministerial Environment Forum Dubai, 7 -9 February 2006)

The Great Barrier Reefs the world’s largest coral reef system, composed of roughly 3,000 individual reefs and 900 islands that stretch for 2,600 kilometres (1,616mi) and cover an area of approximately 344,400 km?. The reef is located in the Coral Sea, off the coast of Queensland in northeast Australia. A large part of the reef is protected by the Great Barrier Reef Marine Park. (www.cia.gov.com)

Great Barrier Reef Marine Park Authority (GBRMPA) looks after the planning and management of the reef. The GBRMPA plays a critical role in strategically engaging the private sector in supporting research that protects and preserves the Reef. The private sector in Australia has an important part to play, adding its resources and voice to the quest to protect and preserve the Great Barrier Reef.

The author explains the purpose of this move was to establish a general framework for both the conservation and the ecologically sustain-able development of the Reef. To do this the Authority brought a wide range of stakeholders into the planning process: tourism, fishing, conservation groups, Aboriginal interests, state and local governments, etc. All participated in discussions of the Reef’s future and how to ensure it via responsible management of the Reef. Through its growing project portfolio, the GBRMPA provides a way in for business and philanthropy to invest in the Reef’s future. Working in partnership with business, government and philanthropy, a strategic, collaborative and coordinated approach to Reef research and increases the pool of funding available to investigate and address the threats to the Great Barrier Reef.

The author explains how private sector jumping in the main interest of the firms to earn from the park and the governments purpose of maintaining the park are both meet. The major hurdle is that there needs to be co-ordination between government, the private sector, local community and other stake holders to find a mutually beneficial outcome. Then the government needs to inform the major effects on the climate of the region. The government is participating in the training of the private sector employees so as to address the basic needs of the Reef including the safety of the marine life.

Author argues that government will have to plan a flexible planning and managing approach so that the private sector can undergo innovations and site-specific outcomes. The trade off that the reef will have from this move will be beneficial for the eco system and the tourists visiting the place as well. The government provides incentives for the private sector to their contribution to the reef. The funds available for the government to maintain the place and also to nurture effective tourism are limited and therefore that is also one of the reasons why the government has moved into privatization. The government and the private sector are both striving forward to maintain the heritage of the site as they know the importance of the Reef very well.

Article 3: Tourism in developing countries, Journal of Vacation Marketing

(Source: Oppermann, M and Chon, KS (1999). Tourism in developing countries, Journal of Vacation Marketing, 5, 3, pp. 301-302)

Tourism is probably the only services sector that provides concrete trading opportunities for all nations, regardless of their level of development. In many developing countries, tourism makes a greater contribution to foreign earnings than such other major exports as textile and clothing or agriculture, without encountering the same magnitude of trade barriers.(www.unctadxi.org) Certain countries also view small-scale niche tourism as having greater potential for increasing local multipliers by enhancing links with agriculture and other sectors. Moreover, small-scale niche tourism tends to reduce spatial inequalities through wider dispersal of enterprises. This should, in theory, stimulate tourist mobility and a more even distribution of tourism expenditure (Brohman, 1996).

Finally, due to its smaller scale, niche tourism is portrayed as a more environmentally and culturally sensitive strategy for rural development. Rapid tourism development and non-local investment tend to marginalise some segments of local communities by exacerbating the inequalities between the poor and those who have more capital. When the poor benefit from tourism, it is usually as street vendors or casual labourers (e.g., porters or ‘low level’ assistants in hotels, lodges, and tour organisations).

Challenges for developing countries:-

Lack of education
Lack of marketable assets
Lack of accommodation/facilities
Lack of financial capital

Even though terrorist attacks and global warming are putting some people off from traveling, the global picture is clear; people are traveling more and more every year. Tourism industry is one of the fastest growing industries in the world. Governments of the developing countries involved in the tourism industry have realized the importance of the industry for social and economic development and for job creation. This approach has led to bigger investments in tourism infrastructure in developing countries and so does the sustainability of tourism industry. It is supposed that Asian countries will be the fastest growing tourism players. The emerging middle class and the higher disposable income are the key factors for the sustainability of Tourism Industry in developing countries. Tourism in developing countries not only provides material benefits for the poor, but can also bring cultural pride, a sense of ownership and control, reduced vulnerability through diversification and the development of skills and entrepreneurial capacity. The developing countries will thus be increasingly important and they will not only be a luring destination for foreigners but they will also become an important source market.

Article 4: Environment justice and sustainable Tourism: THE MISSING CULTURE LINK

(Source: Blanca Camargo, Katy Lane, and Tazim Jamal (2007), The George Wright Forum, Volume 24 Number 3)

San Francisco Peaks in Arizona provides a birth place to many creation stories. Due to global warming resort management developed a plan to convert the sewage water into snow. This is one of the examples where cultural justice is embedded into sustainable development. The mountains were now used as a financial gain rather than living place. Seeing this Ninth Circuit court gave the decision of “save the peaks coalition”. The basic aim of sustainability tourism is conservation of environment and socio-economic well being. Thus the study of cultural impacts is important so as to focus on various issues such as interpretation, cultural survival, heritage issue etc. The other important aspects and contribution towards sustainability is the tangible (worship of fire, practices at burial sites etc) and intangible (mystical, identity, collective temporary etc) environment. It is a relationship between human and their biophysical world which help to give importance to cultural justice.

Cultural sustainability can be said for the groups of people try to retain or adapt elements of culture which are distinguishing them from other people. Attention has been directed towards the sustainability of destinations and their sources. It grows to continue at the international levels which give rise to economic of the country. The World commission on Environment and Development (WCED) distinguished between the public and private spaces in order for sustainable development. It not only meets the demands of present tourist but also enhances the protection of natural resources. It also fulfils the economic, social, and aesthetic need which helps the supports system. Equity is another basic important aspect of sustainability. It starts with addressing people the issues of cultural justice and equity in natural areas destinations giving impact, across different social groups within a destination area.

Still, injustices are commonly seen as it affects community labour and natural habitats, which is the major element of society. It is a balance between environment and economic development. The environmental justice movement is mainly concern about environmental risks the low income of people which is the major issue of the society. It helps tourist to identify its destinations and monitoring potential environmental issues.

It can act as a good reminder to people to maintain their environment and creating awareness between people for social gatherings for maintenance of ecosystem. For example, the places which are open for tourist should be used for learning the purpose and to enjoy natural areas. While those residential places should be restricted for tourists for performing their cultural activities taking place. In other words, the major aspect of cultural sustainability is to have proper management and planning facilities which will in decision making if various cultural goods. The cultural justice as described earlier may assist in creating various policies and laws by the government and development programs which will help to create awareness between people. It contributes further to an already complex domain.

One of the major concerns that researchers have is that many times cultural sustainability is not been taken into account of Cultural and Social Issues as separate phenomena but rather they are treated as either of the two. Then cultural sustainability also takes a lot of time to frame itself and also that the indicators are intangible. Therefore the measurement of cultural factors proves to be a major hurdle in cultural sustainability. Thus it is important for the people to understand that Land does not just represent a physical space, but it also represents various physical, symbolic, spiritual, and social identities of human cultures.

Article 5: Sustainable Tourism in Goa

(A pictorial view of tourism)

(Source: Dr Nirmala De Abreu Conference on Tourism in India – Challenges Ahead, 15-17 May 2008, IIMK)

Goa is one of the most visited places in India with a large number of international and domestic tourists each year. Goa is renowned for its beaches, places of worship and world heritage architecture. It also has rich flora and fauna, owing to its location on the Western Ghats range, which is classified as a biodiversity hotspot. The state is although one of the smallest state in India but still holds one of the highest FDI received state in the country. The government of Goa has therefore declared Goa as a tourist hub. The place is also filled with rich heritage Portuguese culture which also includes old buildings, churches and even alcohol which is available very cheaply. The beautiful beaches of Goa are the main tourist attraction of the region and therefore there has been an increased concern over the sustainability of tourism in Goa due to its small size and over crowdedness.

Tourism is generally focused on the coastal areas of Goa, with decreased tourist activity inland. Goa has two main tourist seasons i.e. winter and summer. In the winter time, tourists from abroad (mainly Europe) come to Goa to enjoy the splendid climate. In the summers (which, in Goa, is the rainy season), tourists from across India come to spend the holidays. Thus at any given time tourists are flooding Goa at all time of the year and is therefore appropriately associated as a ‘Goa- a 356 day holiday’. The main types of tourism are Beach tourism, Adventure tourism, Yoga tourism etc.

Goa faces the issue of sustainability of tourism on the basis of ecological and cultural sensitivity. One of the issue raised by the author is that the survival of Olive Ridley turtles which are famous in Goa. As tourism increases the turtles are finding it hard to search for places to hatch eggs as resorts or people have taken their nesting places. Due to a wide number of foreign tourists in the area it has become hard to maintain an balance between the local people and the international tourists. The local community is the major Stake holder in the sustainability of tourism in Goa as they have to play an important role for a successful and smooth running of tourism industry. Many cultural biases in the people have created conflict between the locals and the foreigners. Issues like the locals stare are foreigners on beaches or even charge them very high for any local product which they want to buy. Tourists also face a lot of harassment from local vendors as they force tourists to buy their products. Environmental issues faced by the people are depletion of water due to tourism and also pressure on land as there is limited availability of land in the region and the increasing tourist demand has forced resorts to locate themselves on prime tourist location. There is also an increased number of pollutants that are emitted in the atmosphere due to heavy traffic, plus there is increased concerns over noise pollution as well.

A few recommendations have been suggested so as to provide a sustainable tourist environment in Goa. These include diversifying areas for tourists by not just concentrating on the beaches but also on other heritage landmarks and tourists spots across the state. To deal with the issue of local people guides and locals should be trained to hospitality management and also respect other cultures and accept them with an open mind. Also to curtail the issue of raising prices the government should set standard prices for products so as to reduce conflicts. Protection of foreign women has been a raging issue in Goa as there have been frequent issues of rape and molestation on women, this is also largely due to the availability of drugs in the market. Thus government should take essential steps to curtail drug circulation and also fix some comeback hours for hotel guests.

Thus if appropriate steps are not taken to sustain the ever growing tourist industry in the tiny state it won’t be that far when the same industry that has been a boon for the state turns out to be a night mare.

Article 6: Ecological footprint analysis as a tool to assess tourism
Sustainability

(Source: Gossling, S., Borgstrom Hansson, C., Horstmeierc, O, and Saggeld., S (2002). Ecological footprint analysis as a tool to assess tourism sustainability, Ecological Economics, 43, 2-3, pp. 199-211)

Sustainable tourism is the major issue for the countries who believe in environmental integrated tourism. The article depicts how Seychelles an environmentally rich island has been affected by the increased number of tourism on the basis of ecological footprint. Ecological footprint is a measure of the load imposed by a given population on nature. It represents the area of the Earth’s surface necessary to sustain levels of resource consumption and waste discharge by that population. Tourism for Seychelles is the second largest source of gaining foreign exchange. To study how sustainable is tourism in Seychelles ecological footprint was calculated on the basis of a few indicators i.e. arable land, pasture, forest, sea space, built-up land and fossil energy land. Arable land, pastures and forests are measured from the statistics which are obtained from the country whereas the other three indicators are stringent to determine as there are many external factors taken into consideration to determine the other three indicators. Fossil fuel consumption for example is not just determined by the islands alone consumption but also by the fact that the consumption of fuels by the incoming and outgoing flights from the region and that too for the sole purpose of tourism.

The results of the ecological footprint are quite alarming when the country believes to achieve Environmental Impact Assessment as a key to increasing tourism. On the other hand Seychelles has protected a proportion of its island as restricted area and has thus has shown that tourism development and ecosystem conservation are in balance. Seychelles has a large amount of foreign exchange generated due to tourism and which is utilized for the imports of various commodities which include oil, food supplies, wood etc. Now, considering the amount of land which is unexplored or unutilized it is been argued that this land could be used in order to obtain the above needed resources. Thus the country faces a trade-off between imports and land conservation. The amount of CO2 and other harmful emissions from aircraft has also gained wide speculation on the belief that Seychelles is sustainable to tourism. Energy saving devices and use of renewable energy has just marginally served the purpose but the main purpose of sustaining tourism is limit the transport distances of aircraft, as a short distance in the locality might prove ecologically beneficial. The energy distribution or consumption in the island is also not viable as just a single resort in the vicinity of the island consumes much greater energy than the neighboring town.

Ecological footprint analysis (EFA) although is a good way to asses tourism sustainability but it is quite difficult to obtain the EFA indicators as many times sufficient data is not available. For example the amount of CO2 or other emissions from the aircraft cannot be measured and as per how much harm it does to the island cannot be measured. Environmental degradation similar to El Nino can be claimed to be due to some natural calamity but similar coral degradation surrounding the island cannot be overlooked. Unsustainable management of the biosphere, for example clear-cutting a rainforest for agriculture would seem to increase the ecological efficiency because the yield factor of cropland is higher than that of forestry. So thus if a few limitations are overlooked then EFA indicators are the best way for Seychelles to achieve sustainability in tourism.

Article 7: SUSTAINABILITY INDICATORS FOR MANAGING TOURISM

(Source: HwanSuk, Choia, and Sirakayab, E. (2006). Sustainability indicators for managing community tourism, Tourism Management, 27, 6, December, pp. 1274-1289)

In this globalised world of capitalism, transportation has played a major role which helps to develop tourism into the world’s largest industries. This tourism has brought a tremendous contribution to the economics of the world. Although it has brought prosperity to the society still it has negative social and cultural impacts and environmental degradation in society. It has damaged all the natural resources and socio-cultural environment of many tourist places. Taking all aspects into considerations World Commission on environment and development (WCED) formed various organisations that will take care of the ecosystem. Basically, it needs tourism planning, management, and development option. This will result in sustainable development to the tradition of neo- classical model. Many individual countries have defined their own national policies and strategy’s for the development of sustainability.

The basic aim of the committee should fulfil the local economic benefits and protect the natural resources. Sustainable tourism has also given rise to the third dimension aspect of literature which includes social, cultural, and ecological dimensions. They also thought of political, and technological. This gave an impact on tourism which led it to the progress for forming a frame work.

William Ogburn was the first one to use the term “social indicators”, which forms a component in sustainable development. The objective indicators act as a central part of monitoring everything. They form the major tool for income, employment, and attract visitors. The efforts were not only seen in micro level but went up to macro level taking all aspects into consideration. It included various methodologies like the survey instrument, data collection/ findings, discussion and conclusion. These four components are the key conditions for sustainable tourism development. These indicators help the local to understand the condition of resources to have a helping hand for the development of the ecosystem. These should be planned and govern by the stakeholders. For maximising the sustainable tourism development residents should have various communication channels which are interlinked with each other to have a better co- ordination between various stakeholders.

For example, the sustainability goal of a small region with a large population would differ from that of large communities with a small population. Thus the indicators should satisfy and precept the role of sustainable tourism development, in order to extend the current situation. Though they have different approaches still they have one role in common that is achieving sustainability. In short, the approach towards sustainable tourism development should always be ecological and should be responsible for all social, political, economical, technological aspects.

Article 8: TOURISM AS A KEY TO SUSTAINABLE MOUNTAIN DEVELOPMENT: THE NEPALESE HIMALAYAS IN RETROSPECT

(Source: S.K. Nepal (2002), Unasylva 208, Vol. 53)

Tourism is one of the largest industries in the world. Mountainous tourism plays an important aspect in economic development and environmental conservation. Hector Ceballos-Lascurian has termed this word “ecotourism”. It can also be defined as “Travelling which does not disturb the surrounding and maintains the existing culture” (Ceballos-Lascurain,1987). It can also be defined as the last hope preservation and protection of various species and ecosystem (Smeral, 1996). And tourism particularly in Nepal where mountains contribute about 80% of the land mass and 20-30% of total volume of tourism which forms homes of various biological and cultural diversity acts as an incoming source to many people which form the major aspects of the Nepalese Himalayas.

Most of the peaks in the Himalayas are promoted as an adventure spot rather than studying point. However such tourism gave rise to both negative and positive points.

Several exposures to tourism brought disruption of local culture, traditions etc. Thus it is necessary for the mountain tourism to be based on sustainability which includes many aspects such as sound environmental practices, equality and long term benefits. Basically, sustainability encompasses ecological, economical and social components, giving rise to major three components of mountain tourism in the Nepalese Himalayas those are as follows:

Conservation of natural resources
Improvement of quality of life of local population
Enhancement of visitor’s satisfaction.

Nepal mainly compromises of three major regions the Annapurna, Everest and the Lang tang regions, where Annapurna -conservation area and Everest and Lang tang- national parks. Basically, all these areas were more exploded by foreign mountaineering which has made them more popular and famous. Thomas Cook offered the first tour of Nepal for the Western visitors, which led to prosperity and popularity to intermediate level. This popularity brought both positive and negative points within itself, by changing Nepal from an exotic destination to that of a cheap rugged and dirty destination. Due to lack of regulation and improper management the beauty of Himalayas was leading nothing but landscape degradation. Many things like garbage, pollution, extraction of natural resources came with it in such a way that it lead to destructions of things. Trekking traffic puts great pressure on mountain traits which were more seen in higher altitudes and where the vegetation was poor. Accumulation of garbage by the trekkers formed the major issue of mountains. Thus the sustainability of tourism industry in Nepal came under sever scrutiny.

In 1991 Sagarmath pollution control committee (SPCC) was established to solve these problems. It has collected up to 250 tones of garbage per year. Despite all these problems the Nepalese Himalayas has been a boon to the local economy. It has under wined the difference between the poorer and the rich. New habitats were developed by people giving a new way towards society. It increased the awareness of the effects of tourism and therefore started planning various conservation programs. People are trying to manage their resources sustainably by the means of energy conservation. The government undertook programs where locals and visiting tourists took an active initiation.

Without these programs initiated by the government the sustainability of tourism was under threat. Such reforms by the government are not only seen in Nepalese Himalayas but throughout the world. Thus mountain tourism in the Nepalese Himalayas represents the dilemma of conservation and development being debated the context of suitability development. Thus if the mystical, spiritual and wilderness image of the Nepalese Himalayas is to be restored and capitalised on, then there must be concrete efforts towards tourism development that is sustainable in ecological, economic and social terms.

Article 9: Sustainable tourism in Maldives

(source: Journal by Ron Gluckman in Maldives)

The Maldives have got a nickname known as “Paradise”. This place is being well equipped by natural beauties which make the place equal to the word paradise. But even Maldives is facing issues related to sustainable tourism. The Maldives 70 percent of the GDP comes from their tourism in their country which makes the government regulate many policies to make the tourism in a sustainable way. Now it been seen that the government is not successes by 100 percent.

The problems which the Maldives face due to the tourism are global warming and the wastes disposed of by the resorts. A one-meter rise in the sea level can swamp 80 percent of the Maldives. The no of tourists to this spot is being increasing year by year, but the resorts available to accommodate them are very less when compared. And the existing resorts are creating problems with their waste disposal.

Summary of Key Findings:

Sustainable tourism is an industry committed to making a low impact on the environment and local culture while helping to generate income and employment for local people (Coccossis, 1996). The aim of sustainable tourism is to ensure that development is a positive experience for local people; tourism companies; and tourists themselves. Sustainable tourism can be taken in four different interpretations that include economic sustainability of tourism, the ecologically sustainable tourism, sustainable tourism development with both focus of environment as well as long-term feasibility of the industry and finally tourism as a part of a strategy for sustainable development (Farsari, 2000). In all the articles that have been critically analysed above all the issues regarding the sustainability of tourism is mentioned.

Government as a Stakeholder:-

Tourism is one of the many external forces influencing the direction and options for national development. The question of whether tourism can be sustainable that is, whether it can contribute to local sustainable development is rightfully addressed in the context of the involvement of Government bodies. A truly practical discussion on sustainable tourism must take place within the government authorities and the communities that are being influenced by tourist industry development. It must create accountability of the tourism industry to locally-defined development visions. Like for example the government of Goa has now put in strict regulation on building of Resorts on beaches as it results in the degradation of precious species. Training local people or industries is also one of the important duties governments should play in order to achieve sustainable development of tourism and therefore in the barrier reef the Private sector industries will initially be directed by the government as per the working of the Great Barrier Reef and only then will it be handed out to them.

The articles reviewed shows that profits may be increased simply by adopting some general environmental principles, such as recycling waste, planning for long-term sustainability, and seeking local partnerships for the preservation of a reef. If these actions result in cleaner, less crowded, holiday resorts, then they are in effect sustainable tourism without being labelled so. Strict norms and rules should be setup by the government so as to see through efficiency in the tourism industry. Short-term government focus is no good for the countries as that would lead to short term gains and long term losses. In Nepal, the government is not imposing strict regulations on the garbage dumping carried out by the tourists at high altitudes.

Environmental Degradation due to Tourism:-

Like other economic activities, tourism consumes resources. Today, tourism is one of the major economic activities in the world. The environmental effects, widely defined, include cultural and social elements and are probably the biggest problem of tourism. Areas, where overcrowding and overdevelopment occur, are often relatively small and possess fragile environments. At peak season visitors can outnumber the resident population. Environmental impact of tourism is most visible in tourist destinations, but effects are also visible at points of origin and transit (McKercher B, 1993).

For example, the output of aircraft, ferries, buses, cars equipment and promotional material consumes productive and energy resources and generates waste in origin areas while travelling long distances creates pollution in the atmosphere and adversely effects th

Summary

This report deals with one of the leading travel group in the world which has been in operation since the past. It has been considered as the most trustworthy and reliable travel group which offers travel packages to its customers across the world. The travel group is Thomas Cook and is one of the leading travel and tourism agencies in the world. In this assignment, the organisation of Thomas Cook has been analysed taking into consideration the internal and the external environmental factors. A number of the important models such as McKinsey model along with the Pest analysis, SWOT and other models have been used to analyse the organisation. The main aim was to analysis the external and internal environment affecting the organisation. Leadership style has been discussed, and it can been seen that Thomas Cook has one of the cost effective organisational structure and follows a flexible business model so that it can be altered as and when needed. Finally the paper ends with recommendation and conclusion which states that the company should work according to the demand of the customers in order to stay competitive and maintain its number one position.

Introduction
Aim of the Report

The aim of this report is to conduct an effective internal and external environmental analysis of Thomas Cook based on separate models. The analysis would help one understand the key competencies of the firm and also the areas where development is needed. Recommendations are also to be provided in due course to enhance the position.

Overview of the Organisation
Company Size

Thomas Cook is one of the biggest companies in the field of leisure and travel and is observed to operate along a large geographical segment pertaining to 22 countries round the world. The company has emerged out to be a key market leader in the leisure and travel category. Thomas Cook, during the financial year of 2011-12 earned total sales revenue emanating to ?9.8 billion from a total customer base of 23.6 million people around the globe (Thomas Group Plc, 2012).

Company Structure

Thomas Cook operates based on a decentralised structure where the board of directors are responsible for delegation of tasks and duties to subsequent committees and other sub-boards. The structure operates along a top-down or vertical integration fashion in the company (Thomas Cook, 2010, p.53).

Main Activities

Thomas Cook Plc works along several segments to render value-added services to the customers. The first or the core product segment contains of packaged tourism services where both flights and hotel services are grouped under one bundle and rendered to the customer. The second segment consists of independent packages that help in rendering consumers a larger flexibility in choosing the travel destinations, duration of tour and other value additions. The third product segment focuses on rendering financial support to the travellers in terms of foreign exchange or money transfers and also in tour assurance services. Fourthly the group also operates via retail houses that help in distributing tour packages and offers to the consumers. Finally the group also operates on the basis of online networks where it focuses to serve consumers in European and pan-European markets effectively (Thomas Cook, 2011, p.13).

Objectives of the Report

As a market analyst and researcher the report to be presented would highlight the strategic potencies and drawbacks of Thomas Cook operating around the world in the travel and leisure segment. The report presented would eventually help the company management potentially address the drawbacks highlighted to develop its performance potential in the future.

Analysis of the Organisation
Internal Environmental Analysis
Employee Engagement Analysis in Thomas Cook

The analysis of employee engagement in organisations reflects the manner in which the people involved relate their activities and conduct to the inherited cultures and values of the concern. Thus an employee engaged is taken to be highly conscious of the organisational values and cultures and thereby coordinates with other colleagues to effectively achieve organisational goals and objectives. The level of employee engagement enhances with the level of relatedness the employer has with the employee groups (Vazirani, 2005, p.3).

Herein, the module of employee engagement is used to analyse the level of loyalty and reliability of the employees in Thomas Cook.

The management of Thomas Cook endeavours to effectively interrelate with the employees involved in different levels to share with them potential information pertaining to changes in organisational strategy and policies. Effective interrelation and communication is carried out by the management both along the web and physical sphere in terms of online chat and electronic mails and circulation of internal magazines respectively. Moreover the employees are also invited to participate in workshops and training programs that in turn enhance their potential to perform in their specific task areas. Further the management body of Thomas Cook from time to time conducts effective surveys to understand the level of interrelatedness of the employees, both new and old to the organisational values and business directives. Survey carried out would clearly hint on the satisfaction and commitment level of the internal people in Thomas Cook. Satisfaction level of the internal people duly enhanced helps Thomas Cook in addressing the changing needs of the consumers and also in effectively reducing the level of staff turnovers in the organisation. Henceforth, employee engagement activities in the company motivate the people to work more productively and thereby augment the revenue and productivity paradigm of the concern (Thomas Cook Group plc, 2011; Thomas Cook Group plc-a, 2011).

Analysis of Thomas Cook based on McKinsey’s 7S Model
The Model

In the McKinsey’s 7S Model firstly, the management works on the basis of set strategies incorporating the views of many to help arrive at a specific action plan to accomplish end goals. Secondly, the management works on a definite structure to integrate the people working in different levels more effectively to meet end objectives. Thirdly, the organisation works based on a set of policies and procedures in achieving targets set. Fourthly, the concern uses internal people as a key resource in meeting the tasks set. Fifthly, different managers reflect different types of styles in meeting the same objectives. Sixthly, the management needs to share the objectives and policies of the concern with the employees to coordinate the actions taken. Seventhly, the skills of the people need to be enhanced in meeting end objectives effectively and successfully (Bhattacharya, 2011, p.333-334). McKinsey’s 7S Framework is reflected in the following diagram.

Figure 1

(Bhattacharya, 2011, p.334)

The attributes of the model would be used to analyse the internal environment of Thomas Cook for they help in setting a paradigm through which the organisational manager gains the potential in drawing the attention of the employees in meeting end objectives.

Structure

The organisational structure of Thomas Cook is found to be vertically integrated with a top-down management structure. Thus decisions are generally taken by the board of directors and higher management body of the concern and percolated downwards to different organisational levels. However in recent times, Thomas Cook is observed to take resort of a global outsourcing strategy to transfer the finance and accounting services in the hands of outsourced teams to help in cost reduction and organisational productivity (Banham, 2005).

Systems

Thomas Cook works based on an integrated business model incorporating the designing of both individual and packaged tours and also assisting the consumers in terms of financing and insuring their tour activities. Similarly, the company works in gaining an enhanced consumer base through carrying out its operations via retail marts and also through the online base. Thomas Cook trains its staffs to render effective customer services acting on such planes (Thomas Cook, 2011, p.13).

Style

The management style at Thomas Cook firstly works in encouraging the growth of organisational diversity in terms of employing people pertaining to different ethnic backgrounds, sex and age differences. Secondly, the management style in the concern promotes growth and promotion based on merits and performance parameters and thereby restricts the practice of discrimination in the workplace (Thomas Cook, n.d.).

Staff

The organisational management works in effectively recruiting a talented and knowledgeable workforce in the concern. Having recruited a talented and multi-skilled workforce the management works in motivating the people and effectively integrating training them to fulfil the needs of the concern (Thomas Cook Group plc-b, 2011).

Skills

The skills of the internal people are enhanced by Thomas Cook through the incorporation of effective training and performance management programs. Feedback is generated to the employees based on performance appraisal systems to help them address the drawbacks. In 2011, the company invested around a‚¤9.9 million pertaining to the training segment (Thomas Cook Group plc-c, 2011).

Strategy

The core business strategy of Thomas Cook is to train its employee base to render value-additions to the service parameters pertaining to the category of independent travel. Further, the management also desires to enhance the financing and business development parameters of the travel related services framework to augment the customer satisfaction experience (Thomas Cook Group plc, 2012).

Shared Values

The higher management body of Thomas Cook works on the basis of transmitting potential information pertaining to business and strategic value to the employees pertaining to different levels. Through the above function the company management desires to work as a single unit in helping to achieve end goals effectively (Thomas Cook Group plc-d, 2011).

Leadership Style of Thomas Cook

Adair (2011) states that leadership style pertaining to an organisation gains effect such that where different individuals and groups are employed to help in achieving a desired task. Herein, the manager is required to divide the entire task among groups and individuals and thereby to monitor and evaluate their performance levels in helping to meet the objectives taken (Adlair, 2011, p.92-93). The same can be represented through the following illustration.

Figure 2

(Adair, 2011, p.92)

Task

Individual

Team

The leadership style of Thomas Cook reflected that it works on a task based model where decisions taken by higher management are percolated through the management hierarchy along different levels.

Task

Individual

Team

Ideal leadership style of Thomas Cook would be where the task is uniformly matched with team and individual pursuits. However, the same is difficult to implement for it means a complete restructuring of the organisational structure.

Task

Individual

Team

Thus the ideal style would be to delineate and percolate the entire organisational task along different layers while at the same time encouraging the development of individuals and teams by incorporating them in decision making functions.

Organisational Structure of Thomas Cook

The organisation structure of Thomas Cook is reflected in Figure A in the Appendix section. Headed by the Board of Directors the company is run by different committee bodies looking after finance, health and safety, auditing and disclosure functions and similar other departments. These committee bodies report to the body of Directors. Similarly the different segments and functions of the company are governed by different boards which are linked therewith other country heads serving different markets (Thomas Group Plc-a, 2012).

Human Resource Systems in Thomas Cook
Induction

The induction program of Thomas Cook helps in introducing the people to the procedures and policies of the company. It also helps in providing guidance to the students regarding aspects of value and culture of the company. Moreover, a buddy is rendered with the apprentices who introduce the aspirant to the task to be performed at different levels along with the values of the company. Effective survey is conducted based on the apprenticeship program where feedback is gained from them to be used for further developments in the induction training rendered. Again, the apprentices are also rendered specific electronic learning modules to enhance the knowledge of the employees in the light of modifications and developments (People 1st, 2011).

Appraisal

The company conducts effective performance appraisal programs of the people pertaining to different levels in the organisation. Performance reviews of the people in the concern are conducted on an annual basis and feedbacks are generated to the people on that behalf. Development of the people is done through involving them in training programs where the skills sets are honed to meet drawbacks (Thomas Cook Plc, 2010).

Communication

Internal communication is practiced in Thomas Cook through the holding of meetings by the board of directors of the concern every year on timely schedules. In addition to the scheduled meetings the directors are also responsible for conducting of other additional and supplementary meetings as and when needed by the company. It is observed that on a general note the board of directors holds around 9 scheduled and 10 other additional meetings in the company (Thomas Cook, 2011, p.45).

Incentive

A host of financial and other incentives and amenities are rendered to the individuals by the organisation so as to effectively retain a productive and highly skilled workforce. The range of benefits rendered range from holiday packages, to shopping discounts and also other insurance and other leave related benefits. Moreover the workplace is made advanced in terms rendering flexible working hours to help the people work more productively.

Areas of Development in Thomas Cook
Structural Paradigm

Pertaining to the structural paradigm the introduction of decentralisation in the organisational ambit has required the company to incorporate information technology infrastructure in the designing of data centres in different regions (Chillingworth, 2010).

Leadership Style Paradigm

The managers of Thomas Cook are required to adapt to changing situations through training programs rendered based on change leadership models. Similarly, the management skills are honed through incorporation of tenets pertaining to emotional intelligence and qualities to manage stress in the workplace (People 1st, 2008, p.3).

Systems Paradigm

Pertaining to operation systems and procedures the company is focusing to enhance its relationship with the consumers through augmenting their safety paradigm and suppliers like hotels and air services on an enhanced scale. Moreover the company is also working for promoting a safer and healthier environment through evaluation of carbon footprint (Thomas Group Plc, 2009).

Plan of Development in Thomas Cook
Kotter’s Eight Step Model

The analysis of the plan of development in Thomas Cook is conducted based on the Eight Step Model presented by John P. Kotter of Harvard. The first three steps focus on analysing external changes, modifying the vision and thereby aligning teams to incorporate the change process. The subsequent three steps focus on implementing the change process through effective communication, empowerment of individuals and motivating people through short-term wins. Finally, the seventh and eight steps focus on sustaining the change rendered and enhancing the impacts of the change through modifications (Kotter, 2006, p.4). The same can be shown in the following illustration.

Figure 3: Kotter’s Eight Step Change Process

(Kotter, 2006, p.4)
Change Process in Thomas Cook

Firstly, the company management created the urgency in gaining profits from the market. Secondly, a team was created through replacements and promotions rendered in the executive body to incorporate the change. Thirdly, a new vision was created focusing on reducing costs, redesigning its organisation structure and enhancing its existing brand image (Linder, 2004, p.114).

Fourthly, the management endeavoured to share the vision gained with the employees involved at different levels. Fifthly, employees were empowered to take individual decisions while rendering services to the consumers. Sixthly, a reward system was brought out to effectively motivate the employees to enhance the service quality (Srinivasan, 2009, p.280).

Seventhly, the company focuses on gaining hold of talented and effective people that would help the concern achieve its set goals. Communication along the lines is enhanced through holding of training and interactions on a two-way level. Finally, new leadership policies and procedures are brought about by the company management to motivate the people to work in a productive fashion (Thomas Cook, 2010, p.40).

External Environmental Analysis

No organisation tends to exists in vacuum as each of the organisations is affected by the external environment. The external environment refers to the context in which organisation promotes, provides and also distributes its services. In maximum number of cases, the organisation doesn`t have control or has limited control over the environmental factors. According to Rubrigt and MacDonald (1981), if any of the organisation faces weakness it would become the tendency of the organisation to overlook the opportunity or the obstacles in the market place, also the external environment (Winston, 1985, p. 45).

Process of Environment Monitoring in Thomas Cook

With a wide range and scale of environmental impacts across the business of Thomas Cook, the operating companies tend to coordinate the performance of the environment locally under the banner of “Group Environmental Policy”. Thomas Cook is committed in reducing the impact of the environment by way of protecting the environment and the resources and the business usually depends on safeguarding the wildlife, biodiversity and also animal welfare.

Market research: In order to monitor the upcoming challenges and trends of the consumer Thomas cook can conduct market research based on the needs of the customers. As the disposable income rise, there arise a shift in the mindset and thus it is required to introduce and act accordingly the customer’s expectation. Thus doing a proper market research would help the travel agency to stay ahead of its competitors. The company can make a page and share it in social networking sites to get feedbacks about the new schemes and can alter accordingly.

Demographic: Thomas Cook is a well known and the oldest travel agency and thus the customers are attracted towards it because of the reliability and experience. Thomas cook can expand its stores where most number of customers visit to attract even more customers.

Benchmarking: Thomas Cook has benchmarked the employee satisfaction. The company believe that employee who is engaged tends to perform better which leads to satisfied and loyal customers. Thomas Cook has compared each of the business segments through an employee survey and the rate of response was 64% in the year 2009. As per the survey in 2009 the engagement index was 3.74 as compared to the benchmark index of 3.67 (Thomas Cook Group Plc, 2009).

Trade publication: Thomas Cook pocket guides covers about 170 destinations and at the same time compact and practical guide for the sun seekers and also for the city breakers. Other guides available for the travellers include driving guides, travellers guide and others. Recently Thomas cook has launched Canadian website which is a conjunction with rebranding of all the retail locations of Thomas Cook across Canada (Travel Trade, 2012).

Scenario Planning: Thomas cook has acquired other travel agents in order to stay competitive in the travel agency sectors.

PEST Analysis of Thomas Cook

PEST Analysis is mainly used to scan the environment. PEST refers to political, economical, social and technological factors (Henry, 2008, p. 41). 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 recognise 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 (Pearson School and College, n.d, p. 11).

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.

Analysis of the Competitive Environment of Thomas Cook

The competitive environment is analysed in order to describe the nature of the following attributes. As the environment keeps on changing each of the listed attributes becomes more or less attractive in order to achieve profitable growth rate. Thus the competitive environment of Thomas Cook has been analysed.

Figure 4: Attributes in the Competitive Environment
(Source: Bigler & Norris, 2004, p. 81)
Diversity

The Thomas Cook Group is committed to provide a workplace which is free from discrimination and that supports diversity. Not only is it beneficial to the employee but also to the company in having a diversified workforce. The organisation provides employee training and monitors the diversity among its employees. Diversity is key strength of Thomas Cook and is an essential part of the business. The company operates in bout 22 countries and thus employs people from different backgrounds and cultures. A diverse workforce tends to create a dynamic as well as innovative culture of the company (Thomas Cook Group Plc-a, 2011). (Refer Appendix A)

Rivalry

Rivalry is high among the leisure industry as with the rise in the disposable income people are spending more amount of money on travelling which has led to the development of many tourism and travel agencies. As a result Thomas Cook also faces rivalry from other travel agencies such as American Express Company, Carlson Wagonlit Travel and Holiday break plc (Hoovers, 2012).

Buyers

The buyers are not given many options to choose from, by the company and thus they need to finalise from the given set of options and thus it can be said that the degree of power of the buyers are low.

Hostility

The degree of hostility is low to moderate in case of tourism industry. The travel and tourism agencies face from fierce competition but they do not declare an open war with respect to price. The marketing strategy adopted by the Thomas Cook and its competitors are almost the same to attract the customers. The companies compete with each other in all the aspects but do not declare open price wars with the competitors.

Cost of Entry

The cost of entry into the travel and tourism industry is relatively moderate to high. The capital requirement is usually high and thus creates a high rate of barrier for the new entry in the tourism sectors. Also the market share is occupied by the top leaders in the market and therefore it becomes hard for the new company to form a brand image and acquire a decent market share to compete with the already established firms. Brand recognition also acts as a barrier to the new entrant.

Fragmentation

The degree of fragmentation is high among the travel and tourism industry. Thomas Cook remains highly fragmented as it had the opportunity to achieve the top three market position. Thomas Cook has targeted gross booking with value of about ?3.5bn (Thomas Cook Group Plc-b, 2010).

Turbulence

The travel and tourism industry suffers from unpredicted variance and thus the turbulence is also high. With economic downturn and other related factors the tourism industry tends to gets affected to a very large extent and it increases the rate of turbulence.

SWOT Analysis of Thomas Cook

SWOT analysis is mainly used by organisation as strategic planning and usually refers to the identification of the strength, weakness along with the opportunities and threats of the organisations. SWOT is conducted to know about the internal as well as the external environment of the company and act accordingly. SWOT Analysis of Thomas Cook will enable the travel group to know its strength and overcomes its weakness and through opportunity overcome the threats.

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.

Threat

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 (Moulds, 2012).

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