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Executive Summary

In the present report the environment of the business is considered and the factors affecting the business environment is considered.  The internal as well as the external factors affecting the business is considered. In this regard the Thomas Cook PLC, a travel and tour company is considered and the factors that affect the organisation are analyzed using the Pestle analysis tool. This tool proves to be helpful in analyzing the political, social, economic, technological, environmental and legal factors that can affect the organisation. Thus this analysis is performed such that the benefits from the analysis profit the organisation.

Table of Content

• Introduction
• A. Overview of the company
• B. Management and governance of the company
• Benefits of Pestle Analysis
• Pestle factors affecting the organisational operation
• Conclusion
• Reference List

Introduction

Business environment means the internal and external factors that affect the environment of the company and the functions of the company which includes the employees, customers, management and supply and demand of the business and the regulations of the business. The business environment identifies that how well a customer’s expectation can be met. The internal factors include the mission and objectives of the company or business and the external factors include the competitors, technological, economic factors etc. In this report the travel company Thomson Cook PLC is taken and the various external and internal factors affecting the company are identified.

A. Overview of the company

Thomas Cook PLC is a British global travel company and is one of the world’s leading leisure travel company. It has around 22,000 employees and it accesses from 16 source markets. This company is listed in London Stock Exchange with sales around 7.18 billion in the year ended Sep’ 2016. It is ranked in the top two in all its core market in terms of revenue. The company was formed in June 2007 by the merger of Thomas Cook AG. It operates in five major divisions in UK, Central Europe, West Europe, Germany and Northern Europe. It has been the main sponsor of the London 2012 Olympic Games. It is referred as one of the biggest and popular package holiday providers in UK. The Thomas Cook PLC is an organisation with ambitious plans for the future. The company has performed very well reporting a increase in profit through its strategic operations. It improved its performance in the tour operations and travel related financial services and emerging markets. This led the company to grow overall and grow overall revenue and profits. The aim is to increase the proportion of sales through a even distribution in the markets. Thomas Cook Group has about 103 executives and 15 executives. It has 25 main executives and 15 subsidiaries.

Figure 1: Organisational Structure
(Source: thomascookgroup.com 2018)

A divisional organisational structure of the company helps in organizing the business activities around geographical, market and service groups. Hence if the company is organized in divisional lines then it is possible to have operating groups for the commercial customers or for the green widget product (Holden, 2016). The company has the ability to separate large sections of the business into semi-autonomous groups such that it can operate well. Thus the divisional structure of the organisation benefits the organisation with the leadership structure that supports the strategic goals of the organisation.

B. Management and governance of the company

The organisation follows consultative management style with a mixture of autocratic one. This management style helps the company with their decision making as the managers here consults with the other team members before arriving at a decision. Here the manager gives instructions but consults with the other members as well. In the words of Baldacchino (2016), a consultative management includes the listening skills and a right consulting channel through which the sales are enhanced by this process of effective decision making. Thus a deeper bond is established between the leaders in the company. This management style makes the leaders comfortable with its own knowledge of the situation and grows with the employees through the process of consulting (Williams, and Baláž, 2015). The manager of the company is completely benefited by this process. The managerial skills can be enhanced working with the experienced professionals and they can help themselves to avoid the complications of their duty. This style can develop a pro activity within the organisation and the employees feel comfortable to express their opinion in solving a problem together. The autocratic leadership style of the company makes the leader to take important decisions without sometimes taking the opinions from the other team leaders (Tribe, 2016). Thus this management style benefits in situations when an urgency situation arises in the company. The autocratic style affects sometimes affects the trust between the leaders and the workers because of the lack of input allowed.

The board of directors of Thomas Cook Plc identifies the importance of making higher standards of corporate governance in order to do the decision making effectively and provide help to the directors to perform their duties to promote the success of the organisation so that the stakeholders can be benefited. Good corporate governance can enhance the success and economic growth of the organisation. The capital can be raised effectively and efficiently with maintaining strong corporate governance and it lowers the cost of capital. As asserted by Robinson et al. (2016), the share price of the company can have a positive impact. On the other hand, the interests of the shareholders and the organisation can be met with the proper inducement to the managers as well as the owners so that the goal of the organisation can be achieved. Good corporate governance helps in the brand recognition and development and it minimizes the risk of mismanagement, wastages and corruption. Thus maintaining a strong corporate environment fits in the interest of all if it is managed in a proper manner.

2. Benefits of Pestle Analysis

Pestle analysis is a method in which the threats to the business can be reduced. The identification the political, economic, social, technological, legal and environmental factors can benefit the organisation and the organisation can gain the valuable advantages (Bassett et al. 2016). These advantages help in the development of the product, launching of the product, marketing strategies etc. in order to increase the success of the organisation. The benefits of Pestle analysis include the following,

Cost effectiveness- The cost of pestle analysis is time. This analysis can be completed in an easier method as compared to the other methods. In the words of Zalengera et al. (2014), the costs to perform any type of analysis are not prone to fluctuations. Pestle analysis provides better results and the analysis can be done successfully in a short duration of time and the cost involved is also less. Thus the company can be benefitted by reduced cost to the company which involves a short duration of time.

Deeper understanding- It helps to identify the different factors and the factors that influence the success of the launching of the product or service. As commented by Rog and Cook (2017), this helps to develop a deeper understanding and planning strategically to benefit any organisation. Thus the tourism company can have a core understanding of the factors that are possible to affect its product and it will be able to avoid the factors that could influence the launching of the product.

Alertness development- Pestle analysis can be used to analyse the threats to the organisation when the business launches any kind of new product or service. It can be used for the marketing plans and the relationship with the customers of the organisation (Lumsdon, 2016). The company can develop the ability to identify the changes and develop a plan to reduce the damage using this analysis technique. Thus the tourism company can be aware of the factors that can influence its product or business.

Exploit opportunities- The Company can identify the external environments and opportunities so that it can strengthen the business. The technological and the social trends can be analysed using this analysis so that the business can expand its opportunities to expand further. The company can understand the target audience using this analysis as the trends of the audience can be analyzed through this analysis.

3. Pestle factors affecting the organisational operation

The pestle analysis is used to evaluate the situations of the Travel and tourism market and the way the situations or factors influence the Thomas Cook PLC and its competitors in the upcoming future (www.thomascookgroup.com). The pestle factors are used to identify the different components that affect the organisation. The changes in the macro environment can be analyzed using this analysis tool. This macro environment can affect not only Thomas Cook Plc but also it impacts the other players in the travel and leisure. This can help in identifying the challenges faced in the macro environment besides the competitive market.

Political factors – Risk of military invasion – Corruption – Bureaucracy – Property protection – Antitrust laws – Pricing regulations – Taxation – Wage legislation – Industrial safety regulations	Economic factors – Exchange rates – Government intervention – Infrastructure quality – Comparative advantage – Labor costs – Inflation rate – Unemployment rate – Interest rate	Social factors – Demographics – Education level – Eulture – Structure of the society – Entrepreneurship – Leisure interest
Technological factors – Cost structure – Value chain structure – Technological diffusion – Product offering	Environmental factors – Weather conditions – Climate change – Laws regulating environmental pollution – Endangered species – Recycling – Renewable sources of energy	Legal factors – Antitrust law – Discrimination law – Employment law – Health and safety law – Data Protection – Consumer Protection – Intellectual property law

Table 1: PESTLE analysis of Thomas Cook
(Source: Imran et al. 2014)

Analysis

Political factors- The political factors can impact the profitability of Thomas Cook Plc in the long run (www.thomascookgroup.com).  According to CIPD, the cuts in the government spending can lead to the job losses in the public sector. The employee’s can therefore face a fear of redundancy due to this government spending cuts. This will have an impact on the motivation and morale of the employees. This negative impact can affect the redundant employees and the company can face trust issues within the remaining employees.

Economic factors- This factor is a great concern to the company because it impacts the cost, prices and profits to the company. This type of business is an income elastic business as the income fluctuations can have a significant impact on the demand for the product. Hence these type of public intervention in costs and rates of interest can have an influence to the company.

In the words of Weiler and Walker (2014), the government cuts results in decrease in the disposable income of the consumers. In this case of decrease in the disposable income of the consumers the spending also decreases in the elastic items such as package holidays. This results in the reduced profit to the organisation as the spending of the consumer’s decreases. This will lead to the decreasing prices of the organisation as the purchasing capacity of the people has decreased due to this government cuts. Thomas Cook plc has to cut their budgets to reduce their costs. They need to use low cost techniques in order to be in the competitive market.

Social factors- The culture of the society impacts the culture of an organisation in an environment. The demographics of UK is evenly distributed which make the people to travel and this will benefit the organisation as the demographics and the skill level of the population is evenly distributed. The hierarchy power and the class structure of the society make Thomas Cook Plc benefited by enhancing its profit (www.business-standard.com). On the other hand, the culture of the society is more inclined towards such tours and travel thus profiting the organisation. In addition to this the attitudes of the people which include the health and environmental awareness impact Thomas Cook Group Plc. The people on the other hand are intended towards leisure activities thus making more tours and travels. Thus the analysis of the social factors makes the profit of the organisation.

Technological factors- Thomas Cook Plc on recent technological developments make the product or service available at reduced cost such that the company profit as a whole. The product offered is impacted by the technological advancement (Padachi et al. 2016). The cost structure is reduced on adoption of such advanced technological practices. The value chain process is impacted by the technological implementation in order to reduce the costs of the company. The diffusion of innovations and new ideas within the economy led to the realization of the benefits of the company from the technological advancement. This process of technological diffusion leads to the growth and development of the company. It is the application of innovation that leads to the development of the product or services offered by the company. Hence Thomas Cook Plc can improve the technology which will lead to the reduced cost and thus increase the efficiency of the operation of the company (www.gtu.ac.in).

Environmental factors- Protection of the environment is a responsibility and a most sensitive matter of concern. According to the global warming 2020 aviation the protection of the environment is of great concern. A major concern for Thomas Cook Plc is the greenhouse gas emission and the impact of the emission resulting in the climate change (resources.thomascook.in). According to the Climate Change Act 2008, it was set that the emissions should be limited in order to protect the environmental factors such as the climate change. The organisation can use fuel efficient engines such that the environment is not impacted by the fuel emissions. The company should be aware of the laws and regulation such that it does not have to bear any penalty. The products offered can be recycled and renewed. Thus the environmental standards need to be evaluated in order to make operations in the market (Imran et al. 2014). The environmental factors like the waste management and the air and water pollution regulations should be considered beforehand by the company.

Legal factors- The legal factors need to be considered before entering the market. In various countries the legal laws and regulations are strong enough such that the intellectual property rights can be protected. According to the Equality Act 2010 the people are protected against discrimination in the workplace so discrimination is against the law. Again according to the Control Trade in Endangered species Regulations 2005 the species that are endangered needs to be protected. Thus Thomas Cook Plc needs to be aware of the laws and regulations relating to the protection of the endangered species. The tourists need to be restricted in the places where the endangered species are present. Again according to The Waste Regulation 2011 needs the wastes to be collected so that the landfills do not occur in the places of tourism. Thus Thomas Cook PLC needs to be aware of the restriction of the type and the amount of waste that is to be disposed in the landfills and the other legal factors like the consumer and the data protection also needs to be ensured (Brondoni, 2016).

Conclusion

From the above report it can be summarized that the factors affecting the business environment should be identified such that the business can identify that how well it can meet its customer’s expectation such that it can be capable of enhancing its profit to the business. The external and the internal factors have to be kept in mind such that the business growth is possible. Here the Thomas Cook Plc company is considered which a global travel is and a tour company and the internal and the external factors affecting the company are identified. It is surfaced that the management of the company of consultative management style which profits the organisation as this management style helps in building the relationship among the leaders and the consultative approach proves to be a success for the organisation. On the other hand, the corporate governance of the company helps the company to earn a brand value and success to the organisation. Here the pestle analysis is done to enhance the product and services offered and this help in the strategic plan the business can develop to expand the opportunities of the business. The pestle factors help in analyzing the threats and risks to the business. Hence using this analysis tool, the business can be profited as a whole.

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