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The tour operator
industry in Europe
IULM, 09.06.14 Filippo Marongiu, Giorgio Kwiatkowski, Federica Salaroli, Mathilda Bör...
The client markets
LEISURE
GROUPS
BUSINESS
• BRIC
• Adventurous
• Religious
• Student travel
• Medical travel
• Wellness &...
Porters Five Forces
Industry
competitors
Competition
from Substitutes
Threat of Entry
Bargaining power
of buyers
Bargainin...
Competition from
Substitutes
Other TO’s
1. Price: the same
2. Switching cost: might exist
(for TA’s)
3. Buyers loyalty: hi...
Threat of Entry
• LOW capital requirements
• Economies of scale: high! low fixed cost (group buying)
• NO/LOW cost advanta...
Bargaining powers
Buyers price sensitivity
• TA’s: are they loyal or price
sensitive?
Competition is big so they are
eager...
Industry competitors
• Crowded!
o TUI Travel Group & Thomas Cook Travel Group 66% market
share
o Small & Micro enterprises...
Strategic group:
the parameters
• Selected parameters for assessing a consistent strategic group
in T.O.s industry will be...
Strategic group: the competitors
TUI
T.O.
O.T.A.
Hotel Reservation
Airlines tickets
Cruises reservation
Car rental
Branded...
Strategicgroup: the scheme
Vertical Integration
Low Average High
1234567
Productrange
TUI
Strategy MatrixBroadNarrow
DifferentiationLow Cost
TUI
RED: TUI
VIOLET: Thomas Cook
GREEN: Expedia
TUI
The cost advantage matrix
Low High
YesNo
Acceptability
Lowestcostonthemarket
TUI
TUI
• Low costs of operations through ver...
Inboundlogistic
OutboundlogisticsOperations Marketing & sales Service
• Vertical integration
• Low cost packages
• Persona...
Thank you for your
attention!!!
Any question?
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Strategy analysis tour operators

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A strategic analysis of the European tour operating industry according to the Porter business model. TO's competitiveness, strategy matrix and value chain.

Published in: Education

Strategy analysis tour operators

  1. 1. The tour operator industry in Europe IULM, 09.06.14 Filippo Marongiu, Giorgio Kwiatkowski, Federica Salaroli, Mathilda Börjesson
  2. 2. The client markets LEISURE GROUPS BUSINESS • BRIC • Adventurous • Religious • Student travel • Medical travel • Wellness & Relaxation • City Breaks • Incentives • Knowledge & Learning • Sustainability • and much much more…
  3. 3. Porters Five Forces Industry competitors Competition from Substitutes Threat of Entry Bargaining power of buyers Bargaining power of suppliers
  4. 4. Competition from Substitutes Other TO’s 1. Price: the same 2. Switching cost: might exist (for TA’s) 3. Buyers loyalty: higher loyalty from TA’s Online reservation systems 1. Price: low (do-it-yourself) 2. Switching cost: probably no/low switching cost 3. Buyers loyalty: no/low loyalty & UI PI US PS = UI PI UI PI <?
  5. 5. Threat of Entry • LOW capital requirements • Economies of scale: high! low fixed cost (group buying) • NO/LOW cost advantages • Product differentiation. YES & NO • Access to channels of DISTRIBUTION • NO governmental & legal barriers TA’s Consumers Low barriers of entry (www & €)
  6. 6. Bargaining powers Buyers price sensitivity • TA’s: are they loyal or price sensitive? Competition is big so they are eager for price reduction • Consumers: low loyalty & price sensitive Relative bargaining power • Relative vertical integration • Buyers information (TA & consumers) easy with internet? • Suppliers: airlines, trains, resorts, B&B, excursions, hotels… • Do these suppliers have large bargaining power? of buyers of suppliers
  7. 7. Industry competitors • Crowded! o TUI Travel Group & Thomas Cook Travel Group 66% market share o Small & Micro enterprises make up 99% of the market • No high diversity of competitors • Product differentiation • This is what the industry is working on now to be more competitive. Product differentiation is otherwise difficult • Industry growth • Cost structure: low fixed, high variable
  8. 8. Strategic group: the parameters • Selected parameters for assessing a consistent strategic group in T.O.s industry will be: Products range and Degree of vertical integration • Tour Operators industry is a very differentiated one with a very broad array of products and services which might easily determine the success of a company; • The ability of a company to internalize as many services as possible is a peculiar factor, which might reduce costs (even increase them depending on the nature of the service) or create chances for incremental businesses and revenues
  9. 9. Strategic group: the competitors TUI T.O. O.T.A. Hotel Reservation Airlines tickets Cruises reservation Car rental Branded Airline Branded resorts Thomas Cook T.O. O.T.A. Hotel Reservation Airlines tickets Cruises reservation Car rental Branded Airline Expedia T.O. O.T.A. Hotel Reservation Airlines tickets Cruises reservation Car rental KUONI T.O. Packages creation Club Med T.O. O.T.A. Hotel Reservation Branded resort Hotelplan T.O. Hotel reservation Cruises reservation Alpitour T.O. O.T.A. Hotel reservation Airlines Tickets Branded resorts E.F. Niche T.O. English Courses FTI T.O. O.T.A. Hotel reservations Airlines tickets Camper vacations (German MKT) Pegas T.O. O.T.A. Hotel reservation Airlines tickets (Russian MKT) Primera Group T.O. O.T.A. Hotel reservation Airlines tickets Branded airline (Northern Europe MKT) AllTours T.O. O.T.A. Hotel reservation Airlines Tickets (Northern Europe MKT)
  10. 10. Strategicgroup: the scheme Vertical Integration Low Average High 1234567 Productrange
  11. 11. TUI Strategy MatrixBroadNarrow DifferentiationLow Cost TUI RED: TUI VIOLET: Thomas Cook GREEN: Expedia TUI
  12. 12. The cost advantage matrix Low High YesNo Acceptability Lowestcostonthemarket TUI TUI • Low costs of operations through vertical integration • TUI introduced a new cost cutting programme strategy in 2013 • 2013 closed with positive results in sales for both winter 2013 and summer 2014 • Efficient distribution channels and good economy of scale are TUI competitive advantages on its competitors
  13. 13. Inboundlogistic OutboundlogisticsOperations Marketing & sales Service • Vertical integration • Low cost packages • Personal packages • Diversification • Sustainable travel • “being their own supplier”/acquisition • High economies of scale • Ticketless travel • Multichannel distribution • Online sales • FFP • Research in customer attitude (towards sustainable development) • Direct sales & TA • Expansion in Asia • May 2012: license for Chinese outbound • High quality of customer service • Customer feedback for retention • “emergency line” 24/7 Infrastr.Infrastr. R&DR&D HRHR SuppliersSuppliers • London stock exchange • 52% TUI AG, 26% S-group travel holding, 14% Private Inv., 8% Rio hotels S.A • TUI Travel, TUI Hotels & Resorts, Cruise Ships • Mainstream sector 80%, Acc. & Dest. 12%, Specialist & Activity 8% • Worlds first global warfare guidance for animals in tourism • Upgrading web front & reservations • Modern technology • Training & skills • Talent management • Collaboration with universities • 2013: supplier code of conduct (human rights, labor laws, local commitments…) • Training • Environmental sustainability guidelines VALUE The Value Chain
  14. 14. Thank you for your attention!!! Any question?

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