MANAGING STRATEGY 2

Managing Strategy 2



Table of Contents

Introduction2

Discussion & Analysis2

PESTEL Analysis:2

Political:3

Economical:3

Socio- cultural:4

Technological:5

Environmental:5

Legal6

Porter's Five Forces Analysis6

Potential Entrants:6

Substitutes:7

Suppliers:7

Buyers:7

Competitive Rivalry:7

Conclusion9

References10

Appendix12

Managing Strategy 2

Introduction

The travel and tourism industry, in the UK, is one of the biggest and fastest growing industries. In the UK, the Travel & Tourism industry is almost five times the size of automotive manufacturing and as many jobs are supported by the sector almost as the financial sector. According to the Department of Culture, Media and Sport, in the UK, in 2002-2003, the total value of the tourism and travel sectors was £91.8 billion, majority of which comes from domestic instead of visitors coming from other countries. Tourism is acknowledged by the World Tourism Organisation as the fastest growing economic sector, getting earnings to countries through foreign exchange and providing jobs opportunities. In tourism, jobs are not only created directly but also in associated industries, like in construction. However, in an article by Eric Viardot, Viardot mentions that due to the economic crisis, a downturn has been experienced by the industry, which has created new threats and modified the competitive forces. This paper is aimed at analysing a full external tourism industry profile by applying PESTEL, Porter's Five Forces and Industry Life Cycle analysis framework, threats and opportunities.

Discussion & Analysis

PESTEL Analysis:

The environmental factors are categorised by the PESTEL framework into political, economical, socio cultural, technological, environmental and legal. It helps identify with the external influences on an organisation and key change drivers (Johnson etal., 2005, p. 55- 56).

Political:

Strict laws of immigration and high security reasons are produced by terrorist attacks. (Hirsch, 2009; Weissinger, 2003). If after these terrorist incidents, some destination are put by the Foreign and Commonwealth Office (FCO) off-limits, travel insurers would recline to insure tourists if they go to those places (Urquhart, 2006). Tourism suffers, when perceptions of tourists are affected by long-standing tourist attacks (Sónmez, 1998). The tourism industry can be adversely affected by government tumbling and political instability in that country. The tourism of any particular country is not only affected by its political instability but that of its neighbouring countries too (Sónmez, 1998). The similar is the case with terrorism.

A major impact on the tourism industry is induced by varied taxation policies on tourism, imposed by countries. Subsidies and tax exemptions are often provided by governments in their countries for the promotion of tourism of their region (MENAFN, 2009; ndTax, 2009).

Economical:

A crucial role is played by exchange Rates in international tourism and trade. On tourism, the effect of exchange rate regimes is statistically discussed by Gallego et al.(2007), who concludes that a positive impact on tourism is generated by more fixedness in the exchange rate arrangements. Taking into consideration that the situation of Euro is diminishing the gap with Pound Sterling may have an impact on the outbound tourism to other Nations of European Union from UK and the tourism agents could be affected by this scenario definitely.

The world business is provided with unlimited opportunities by globalisation and the tourism ventures are certainly boosted up ...