Saxion University of Applied Science December 15 International Business Plan 2011 Group E4 Floris Neuman (2426688) Project IBMS 6 Ivander Atmojo (2430243) Pham Thuy Duong (155031) Yao Deng (133810) Project IBMS6_ Business Plan Group E4 Contents Executive Summary Thomas Cook Business Overview in Comparison with TUI – Thomas Cook’s biggest competitor ...... 5 I. Companies General Overview .................................................................................................... 5 1. TUI Travel plc ......................................................................................................................... 5 2. ThomasCook Group plc .......................................................................................................... 6 II. DEPEST Analysis (European Market) ....................................................................................... 6 1. Demographic factors ............................................................................................................... 6 III. Companies Internal Analysis .................................................................................................. 8 1. Business strategy ..................................................................................................................... 8 2. Human Resource Management (HRM) .................................................................................. 9 2.2. Recruitment Diversity ........................................................................................................... 10 2.3. Diversity ................................................................................................................................ 11 2.4. Health and Safety .................................................................................................................. 11 3. Sustainability strategy and management ............................................................................... 12 4. Financial Analysis ..................................................................................................................... 14 IV. SWOT (European Market) ........................................................................................................ 17 V. Recommendations ......................................................................................................................... 17 Thomas Cook Business Strategic Plan of Expanding to Chinese Tourism Market .............................. 19 I. Chinese Tourism Market - Current status and Future Potential Developments ........................ 19 1. PEST Analysis ...................................................................................................................... 19 2. China Outbound Tourism ...................................................................................................... 20 II. Strategy Formulation for Thomas Cook to entry China ............................................................ 21 1. Competitive Analysis - Thomas Cook operate in China Porter’s 5 forces ........................... 21 2. Key external Factors ............................................................................................................. 22 3. Key internal Factors .............................................................................................................. 24 III. Strategy Analysis and Choice ............................................................................................... 26 1. SWOT Matrix ....................................................................................................................... 26 3. Cost of “Strategies” ............................................................................................................... 27 4. The Quantitative Strategic Planning Matrix (QSPM) ........................................................... 29 IV. Strategy Implementations ..................................................................................................... 30 1. Finding Partnerships in China ............................................................................................... 30 2. Human Resource Management ............................................................................................. 31 3. Product Development ............................................................................................................ 31 4. Operation ............................................................................................................................... 32 2 Project IBMS6_ Business Plan Group E4 5. Marketing .............................................................................................................................. 32 6. Finance .................................................................................................................................. 33 7. Legal Issues ........................................................................................................................... 33 V. Expected Joint Venture Result .................................................................................................. 34 Appendices A. Appendixe1: References .............................................................................................................. 36 B. Appendix 2: Regulation on Travel Agencies in China ................................................................ 38 C. Appendixe3: Cost Analysis .......................................................................................................... 43 D. Appendixes4: Personal work statement ....................................................................................... 44 3 Project IBMS6_ Business Plan Group E4 This report is a Business plan for Thomas Cook to enter the Chinese Tour Operator Industry to Executivebecome an outbound tour Summaryoperator, to bring Chinese travelers to Europe, through a joint venture with Chinese Southern Airline. This report consists of two parts, the first part consisting of the analysis of Thomas Cook in Tour operator industry in the European market in the comparison with TUI. The analysis follows several key concepts the DEPEST, Business strategy, Human resource Management, Sustainable business and Ethics and the financial aspect. The advantages come from strategy, Human Resource Management strategy and Recruiting and financial aspects. Their strategy advantage comes from a decentralized structure, where more is asked of the employees to make decisions with in their working team or by themselves, it has shown that the centralized and leader oriented way of TUI is less flexible especially when fast decisions should be made. Towards the strategic part we feel that Thomas Cook is better since it also works with owned hotels and other facilities that give an edge in costs since the profit is for Thomas Cook. The financial aspect shows that Thomas Cook, profitability, and Operating ratio were better over the last 3 years. Especially the gross profit is higher for Thomas Cook and although after that the operating profit margin and Net profit margin are just higher due to lower costs. Based on the conclusion of part one, we decided to continue with Thomas Cook to develop an International Business plan. The market we chose is China due to its rapid growth of economy and fast changing in quality of live. Moreover, due to the political and economic hurdles in the European fronts in the last year, and this may be only the beginning, China is a very lucrative market for Thomas Cook. We believe that the our strategy to joint venture with China Southern Airlines is expected bring Thomas Cook out of the sluggish financial situation in the European Union. This strategy is expected to double Thomas Cook’s net profit margin, increase 40% current ratio, and established 6 Thomas Cook China outlets in 6 biggest cities in Mainland China by 2017. However, in order to realize this strategy Thomas Cook need to invest € 3.000.000 in consecutive years to cover the expenses for the first 3 to 4 years. An aggressive marketing campaign is to be implemented in order to gain brand recognition and to gain substantial market share in Chinese tour operator industry. 4 Project IBMS6_ Business Plan Group E4 Thomas Cook Business Overview in Comparison with TUI – Thomas PARTCook’s biggest I competitor I. Companies General Overview TUI and ThomasCook are 2 leading companies in the global tour operating business. With operating activities around the world, TUI and ThomasCook are not only preforming as tour operators, but also own a fair share hotels and airlines (under different brands). 1. TUI Travel plc Together with TUI hotels & Resorts and Cruises, TUI Travel plc is daughter firm of TUI AG Corporation. Operating in over 180 countries, serving more than 30 million customers in over 27 source markets, obtaining £13,525 million revenue (2010), TUI is known as number 1 player in the travel industry. Company Vision & Mission Competitive Advantages TUI group treat sustainable development as much important as economic goals. Their annual report shows us the ecological and social activity is a significant part of TUI corporate culture. As the result, TUI group will be listed as an industry leader in the Dow Jones Sustainability world index and receives top marks for its climate strategy.1 1 Dow Jones Sustainability World . (2011, September 08). TUI Group. Retrieved from http://www.tui- group.com/en/media/press_releases/archiv/2011/20110908_djsi 5 Project IBMS6_ Business Plan Group