SG7001 Managing Strategy Operations and Partnerships Sample
Activity 3
3a.
| Identification of the industry | Tour and travel industry | |
| Megatrend | Key issues affecting the industry | Impact and implications |
| Technological integration | · Internet of things
· Digital security · Cyber attacks |
The use of technological advancement and digitisation is increasing irrespective of the industry, which is why the travel industry is not unfamiliar with the concept. Rapid and sustained technological changes are impacting the whole business operations of the company (Vogel, 2021). This is an opportunity for the tourism industry as the industry can focus on providing better and enhanced customer service to retain them. The major factors that can respond to this opportunity involve Contactless payment, IoT devices and several mobile applications. These are changing the way people travel, providing convenience and safety. |
|
Climate crisis |
· Sustainability
· Pandemic |
The Climate crisis is also creating a great impact on the tourism industry. The emergence of COVID-19 has raised awareness of humans’ impact on the environment and environmental degradation. The situation is getting worse, and the tourism industry is responsible for reducing its greenhouse emission. This is a high-priority threat that is needed to be addressed by this industry by taking sustainability measures. The factors that can provide an opportunity for this industry to deal with the climate crisis involves going green, focusing on environmental aspect at every level and reducing emission. |
| Urbanization | · Changes in consumption patterns
· Changing purchasing power |
The acceleration of urbanisation is also a major trend that can impact the tourism industry. Urbanisation results in increasing deforestation and decreasing biodiversity. The major causes of urbanisation are commercialisation, employment opportunities and the modernisation concept. This promotes the tourism’s development to investment effect and consumption. Thus, this leads to conversion in customer choices, promoting tourism pattern concerning expanding and consumption of tourism consumption’s scale. |
| Sustainability | · Increasing regulations of government to reduce the use of substances that are adversely impacting the nature (Chang et. al. 2020). | Sustainability is the most important trend in the tourism industry, and this is an opportunity for the industry as it creates a positive impact, including wildlife preservation, cultural heritage preservation and employment creation. Sustainability in tourism contains focusing on the environment, community as well as economy while meeting the needs of the visitors and the host community. The components involve protecting the natural environment, managing tourism activities and protecting natural and wildlife resources. This benefits the industry by reducing the emission-reducing carbon footprint, stabilising energy costs and adding value to the property. |
3b:
| Environmental factor | Issues pertinent to the industry | Implications for the industry |
| Political factors | · Changing political regulations
· Covid guidelines (Beirman, 2020). |
The political stability and condition are crucial in determining the image of the region’s destination, which attracts tourists. Therefore, the industries operating in the travel industry must focus on political guidelines, especially the travel guidelines released after the pandemic. This is because that safety is the primary responsibility of the travel industry, the employees, and the tourists. |
| Economic factors | · Travel organizations get affected by the purchasing power of the target market. | Economic factor comprises the inflation rate, interest rate or employment opportunities prevailing within the country. All these aspects impact the purchasing power of the country’s people, which can impact the organisations operating in the travel industry. Therefore, in such situations, travel companies must focus on assessing the economic stability and the purchasing power of the target market of the country (Dang et. al. 2020). The higher the disposable income of the customers will be, the more sales can be generated by the company operating in the Tours and travels industry. |
| Legal factors | · Travel companies get impacted by the changing rules and legislation (Göral, 2021). | The travel industry is required to follow certain specific regulations and laws. This involves employment regulations, the health and safety of the employees working in the industry and the discrimination act. Thus, in such a situation, the travel companies in the industry must keep track of these legislations and the laws so that proper adherence to these can be followed. Moreover, the employees must be provided with a safe and sound working environment, and everyone should be treated equally within the organisation to ensure the highest level of compliance. |
| Porter’s force | Strength | Justification |
| Bargaining power of the buyers | High | The bargaining power of the customers in the travel industry is quite high because various travel companies operating in this industry provide multiple packages, including customisable packages, as per the convenience of the customers. Consumers are available with many choices, which is why the bargaining power is quite high in this industry (Rahman et. al. 2021). |
| Bargaining power of suppliers | Moderate | The bargaining power of suppliers is not a major threat to this industry as there are numerous suppliers available for the tourism companies operating in the industry. The suppliers of the travel companies involve air companies, hotels, car rentals and accommodation sectors. This is because when travel companies prepare packages for their employees, all these facilities are further arranged by the travel company to achieve customer satisfaction |
| .
The threat of new players in the industry |
Moderate | The threat of new entrants in the tourism industry is moderate; there are various determinants of the market environment that the new entrant can change. For instance, the attractive packages of the new market players in the tourism industry can attract another travel company’s already established customer base. They can offer better accessibility to more economic holiday stays around attractive destinations. However, entering the industry and retaining customers requires huge capital, effective marketing strategies, and access to distribution channels. Furthermore, the new entrant is also required to develop relationships with the accommodation sectors And other businesses of the destination, which is quite a difficult task (Vogel, 2021). |
| Existing rivalry in the industry | High | Competitive rivalry involves the existing tour operators of the area or country and the new international competitors. Therefore this refers to the level of competition existing in the industry. The more intense the competition, the less profitable or attractive the business will be. However, the competition depends on the size and number of the competitors and the changing interest of the customers. There are some instances when customers feel attached to a particular brand or a company, and they only trust that company in terms of service quality, and they do not get attracted by the competitors’ offers. |
| Threat of substitutes | Moderate | The threat of substitutes involves alternative products or services that give competition to existing businesses (Chang et. al. 2020). This is of a moderate degree for the travel industry as the customers can opt for their planning rather than hiring a tour operator. However, most people still rely on customised packages developed by other trustworthy service providers. |
References
Beirman, D., (2020). Restoring tourism destinations in crisis: A strategic marketing approach. Routledge.
Chang, C.L., McAleer, M. and Ramos, V., (2020). A charter for sustainable tourism after COVID-19. Sustainability, 12(9), p.3671.
Chang, C.L., McAleer, M. and Ramos, V., (2020). The future of tourism in the COVID-19 era. Advances in Decision Sciences, 24(3), pp.218-230.
Dang, H.S., Nguyen, T.M.T., Wang, C.N., Day, J.D. and Dang, T.M.H., (2020). Grey system theory in the study of medical tourism industry and its economic impact. International journal of environmental research and public health, 17(3), p.961.
Göral, R., (2021). Competitive Analysis of the Hotel Industry in Konya by Using Porter’s Five Forces Model.
Rahman, M.K., Gazi, M.A.I., Bhuiyan, M.A. and Rahaman, M.A., (2021). Effect of Covid-19 pandemic on tourist travel risk and management perceptions. Plos one, 16(9), p.e0256486.
Vogel, H.L., (2021). Travel industry economics: A guide for financial analysis. Springer Nature.
