Strategies For Flight Centre Travel Group To Survive And Succeed In The Travel Industry

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Strategic planning is significant for every company as it offers direction and outlines of the measurable goals. It is said to be a tool utilized for directing daily decisions and assessing the progress and altering approaches while moving forward (Lohrey, 2018). This report is focused towards planning strategies for Flight Centre Travel Group which will support it in surviving for longer-term in the industry. The report will highlight company’s internal and external environment and stakeholder analysis. Besides this, it will discuss what parts of the company’s business need to be changed for smooth functioning. Further, monitoring and controlling of the strategies will be provided and issues that are associated with the implementing strategies. Evaluation of the strategies will be provided in the report.

Flight Centre Travel Group Limited offers retailing services of travel under single brand i.e. Fight Centre in corporate, wholesale, and leisure travel sectors across the world. Other travel brands of the company are comprised of Student Flights, Liberty Travel, Escape Travel, Infinity Holidays, Travel Associates, Infinity Holidays, Cruise about, Corporate Traveller, GOGO Vacations, FCm travel solutions, Campus travel, Stage and Screen, and Cievents. It provides leisure services of travel in order to serve niche sectors, along with mass, premium, cruise, and youth markets; and corporate services of travel to cater the requirement of the organization of different sizes all over the industry. Besides this, the company also provide services and products to its network of international and national retail outlets. Further, it also provides various other services like travel academies, bike retailing, and foreign currency, employee benefit, and recruitment marketing businesses (Bloomberg, 2018).

Recommended Strategy	Reason Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Priority
Competing of Edge	Competing of Edge theory can be used by the company because it will be beneficial for longer-term and helps the company in remaining always updated.	High
Blue Ocean Strategy	Blue ocean strategy will help the company in focusing on the future growth as it is a systematic approach and creates value and eliminate cost.	High
Merge Strategy	If Flight Centre Travel Group opts to adopt merge strategy then it will help it in creating new products and understanding customers more specifically.	High

Political	The terrorism, coups, warfare, and violence have an adverse direct effect on the travel industry’s development
Economic	This industry is paying good compensations to its employees. The profit of the industry is effective in handling the positive position in the market.
Social	The innovative culture established by the industry has appealed the customers. The company has always maintained the values and norms of the environment.
Technology	Travel Industry has always adopted the new and innovative technology. It includes airlines, buses, and trains as a transport mode and casinos and hotels.
Legal	The Travel Industry should follow all the rules and regulations formed by the state government that are indirectly and directly related to the complete traveling procedure.
Environment	The basic concerns related to the environment are effective utilization of oil and fuel in the traveling (Pratap, 2017).

Key Success Factor of Travel Industry is the Market position, diversification, distribution and marketing network, and operating management.

Supplier’s Bargaining Power	Medium to low
Buyer’s Bargaining Power	Medium to high
The threat of Substitute Goods	Medium to low
Rivalry among competitors	High
Entry Barriers	Medium to high

The travel industry possesses some players who dominate the industry. They hold a maximum of the market shares and they also affect the shaping and structure of the industry. The players of the industry are normally focused towards generating profit just need to have an effective strategy. Therefore, it requires a strategy that helps in making it easy for the customers to know more about the firm.

Flight Centre Travel Group is one of the largest outlets of travel with the head office in Australia. The overall turnover of the company is $20 billion and has 20,000 employees besides, this it is listed on the stock exchange of Australia. Some of the competitors of the company are Travelport Locomote, Global Work and Travel Co., Smaller Earth, and Travel perk. The Travelport Locomote advertises its services with the help of mass communication tools such as Advertisement. Along with this, it makes use of celebrities to promote the services and products.  

External Analysis

Stakeholders are those people who possess some interest in the business activity like customer, employees, government, society, etc.

Flight Centre Travel Groups is very much focused towards their stakeholders it tries to fulfill their needs and desire in the market. However, it is suggested that company need to focus on all the stakeholders because just focusing on a single group of stakeholder can create issues and result in losses for the company.

Perspectives	Objectives	Measure
Financial perspective	Increasing International Sales Increase in the revenue	% of revenue from international sales 15% increase in ROE
Customer Perspective	Satisfaction of customer and acquisition	Lifetime value for the customer
Internal business process Perspective	The decrease in employee turnover	Employee satisfaction by offering perks, benefits, and bonus.
Learning and Growth	Adopting new and innovative technologies	Increasing number of clients or customers

Value chain analysis can be used by the company as its support in identifying methods to reduce cost, eliminating waste, optimize effort and increasing profitability of the company.

VRIO Analysis

VRIO is said to be an internal analysis of the company. It is utilized to recognize and assess resources of the company. It involves four criteria i.e. value, rarity, imitability, and organization (Jurevicius, 2013).

The resource of the company i.e. human resource, destinations and packages of the tour provides value to the company. The resources of the company provide a competitive advantage to the business.

The resources of the company are not rare because many of the other companies also offer a similar type of services by using a similar type of resources, however, the way of utilizing those resources is different.

The resources of the company are not imitable because the management of the company is very skilled and frame strategies that are different from the competitors.

The business is organized because it makes maximum use of its resources in order to get success in the market (Frue, 2017).

The current strategies of the company are to upsurge the productivity in short run in three major sectors:

Retailing of Leisure travel, which is securely largest sector of FLT in terms of sales

Corporate travel, which accounts for the success of the overall business

The TEN which is a new and quickly growing pillar of business

In the sector of leisure travel company desires to make multiple channels to improve the interaction with the consumers in all the brands like high touch channel, low cost an 24/7 services. As per the analysis of the external environment travel industry is one of the developing industry, therefore it has potential to improve the customer service.

In the sector of corporate travel, the company is focused towards developing the sector. Technology will be utilized because it will enable corporate travelers to remain linked and track the performance. It will be very expensive to imitate, therefore, this is the strategy that will be effective for the company.

PESTLE Analysis

The TEN as the business pillar. If the company will invest in this strategy it will provide various benefits for the company that will be aligned towards fulfilling strategic objectives, comprising control over the experience of the customer.     

Strength- Company has a positive track record of assimilating complimentary companies by acquisitions and mergers.

It has talented and skilled workers by successful learning and training programs. It has invested a huge amount of resources in the development of its employees.

Weaknesses- The product’s marketing is not up to the market. It is known that the products are performing goods in terms of sales however they have poor brand positioning and USP (unique selling proposition).

The company does not have effective technologies. In today’s business environment it is very important to be updated with the technologies however company is not able to do so.

Opportunities- Company has the opportunity to cover new customers with the help of online channels.

The company can adopt new standards of technology and free trade agreements of the government that can help it in entering into new and developing markets.

Threats- One of the major threat to the company is its incapability in offering innovative and new products in the market.

Another threat is of new and advanced technologies developed by the competitors of the company (Fern Fort University, 2018).    

The financial statement of the company is reflecting the positive position of the company in the market as it revenue has increased in 2017 by 1.3 % which reflects that it is capable to survive in the market for a longer time duration in the market (Flight Centre Travel Group, 2017). However, due to some weaknesses such as lack of technological environment, the poor brand positioning of the products can create obstacles for the company while moving towards growth.

Pure Diversification Theory of Merger- Performing diversification by mergers is commonly known as diversification by internal growth. This strategy is adopted when managers of the company demand for the diversification for tax advantage, and reputational capital.

Flight Centre Travel Group Company need to do change and can eliminate some of its leisure brands from its portfolio. These brands can be Escape Travel and Cruiseabout (Skift, 2018). This can be done to attain market share and perform mergers in diversified business that can increase the market share of the company and customer base.

Flight Centre Travel Group needs to do some changes in its organizational structure because it is only compatible with its current model of business, therefore, restricting expansion in diversified product segments. The company can adopt divisional organizational structure because in this company can possess various basis on which different departments are created such as geographical territory, functions, combination approach, product.

Key Success Factor of Travel Industry

Source [(Policy Council, 2018)]

In order to perform merger in the diversified business flight center travel group need to hire staff which will be skilled and experienced in the adopted merger strategy and can effectively manage the functions of the business. The company needs to conduct recruitment and selection to hire skilled and desired employees that can help in attaining success and growth by maintaining the viability of the company.  

In order to monitor and control the recommended strategies company need to follow the following procedure:

• Forming standards in order to measure the actual performance
• Measure Actual Performance
• Comparing actual performance with the set standards
• Take corrective actions (£opatowska, 2015)

Participatory Method- Participatory method is used because it enables stakeholders to be involved in the decision-making process. They help in creating a sense of ownership of the results and recommendations of Monitoring and constructing local capacity (GSDRC, 2002). Flight Centre Travel group can adopt this method as it will help in taking effective decisions by involving stakeholders.

Customers	The merger can result in losing the trust of the customer if the merged company does not have a good image in the market. (Waddock & Graves, 2006)
Employees	A sense of fear arises of losing the job by the employees of the company. Even it can result in losing their trust. (Vijaywargia, 2016)

Theory of change – Flight Centre Travel Group can implement this theory of change in order to evaluate the use of the changes made in the business and what will be the conclusions. It will support in explaining how the intervention is likely to create the result.  

The methods that Flight Centre Travel group can use for the evaluation of the strategy are Porter five force models, SWOT Analysis and balanced scorecard (Richards, 2017).

Gap Analysis- The management of the company can make use of gap analysis to evaluate the gap between the current position of the company and its expected position. It will evaluate various business aspects such as research and development, profit and production and management of information system (Picolo & Tontin, 2016).

Conclusion

In the conclusion, it can be said that the above-specified strategy specifically merger strategy for Flight Centre Travel Group will be very much effective for the business to get into it because this strategy will help the company in attaining profitability and success in the market. Moreover, this strategy will help it in increasing market share customer base. The above report has analyzed the general environment and current strategies of the company and evaluation and monitoring of implemented strategies. 

References

Bloomberg. (2018). Company Overview of Flight Centre Travel Group Limited. Retrieved from https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=4484222

£opatowska, J. (2015). Improving the production planning and control process. Finance Journal of Management and Finance, 13(4), 119-130.

Fern Fort University. (2018). Flight Centre Travel Group Limited SWOT Analysis / Matrix. Retrieved from https://fernfortuniversity.com/term-papers/swot/nyse/4431-flight-centre-travel-group-limited.php

Flight Centre Travel Group. (2017). Annual Report. Retrieved from https://www.fctgl.com/wp-content/uploads/2017/09/Flight-Centre-Travel-Group-Annual-Report-2017.pdf

Frue, K. (2017). What is VRIO Analysis? Retrieved from https://pestleanalysis.com/vrio-analysis/

GSDRC. (2002). Monitoring and Evaluation: Some Tools, Methods and Approaches. Retrieved from https://gsdrc.org/document-library/monitoring-and-evaluation-some-tools-methods-and-approaches/

Jurevicius, O. (2013). VRIO Framework. Retrieved from https://www.strategicmanagementinsight.com/tools/vrio.html

Lohrey, J. (2018). The Importance of Strategic Evaluation. Retrieved from https://yourbusiness.azcentral.com/importance-strategic-evaluation-25658.html

Picolo, J.D. & Tontin, G. (2016). Using Improvement Gap Analysis for the management of trade-offs of operational strategies. Gest. Prod., São Carlos, 23(1), 48-59.

Policy Council. (2018). Organizational Structure. Retrieved from https://www.policycounsel.org/organizational-structure/

Pratap, A. (2017). Hospitality Industry Pestle Analysis. Retrieved from https://www.cheshnotes.com/2017/03/hospitality-industry-pestel-analysis/

Richards, L. (2017). Strategic Evaluation Methods. Retrieved from https://bizfluent.com/info-8320174-strategic-evaluation-methods.html

Skift, A.L. (2018). Flight Centre Will Eliminate Some Leisure Brands. Retrieved from https://skift.com/2018/02/23/australias-flight-centre-rationalizes-and-diversifies-as-growth-continues/

Vijaywargia, T. (2016). Analyzing the Consequences of Mergers and Acquisitions on Human Resource. Global journal of commerce and management perspective, 5(1), 32-34.

Waddock, S.A., & Graves, S.B. (2006). The impact of mergers and acquisitions on corporate stakeholder practices. Journal of Corporate Citizenship, 22(2006), 91-109.