Tour Operations Management The evolution and growth of the Tour Operations sector Based on the UK case study (Morgan 2002)

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Presentation transcript:

Tour Operations Management The evolution and growth of the Tour Operations sector Based on the UK case study (Morgan 2002)

What conditions are necessary for the growth of package tours? see Casarin Ch 9 in Buhulis and Laws Political Economic Social Technological Environmental What lessons can be learnt from the story of Tour Operations in Western Europe for other emerging markets such as BRINC?

Competitive Strategies in TOps The development of package tourism in Europe has been driven by the competitive strategies of the leading Tour Operators How do theories of competitive strategy help to explain the behaviour of these firms? Use the case study and focus on Thomson

Competitive Strengths What are the key factors for success in this industry? (Jobber 1995) Financial strength Technological Creativity Expertise Product Quality Access to distribution channels/location Identify the sources of Thomson’s strengths using these headings

Competitive Behaviour competition or co-operation head-on or blindside approaches the generic strategies (Porter 1980) - low cost leadership - differentiation - focus Find examples of these strategies from the case study

Sources of cost leadership Jobber Economies of scale Experience curve -> efficiency gains Integration –Capacity utilisation (marginal costing) Production in lower cost/deregulated country What was the basis of Thomson’s leadership?

Example : First Choice Reverse Charter Model – e. g. Turkey to Europe Aircraft based in destination Low cost local operations Service 28 regional airports in source markets

Sources of differentiation Product features (USP) v brand personality (Ogilvy) Service – technical reliability v functional quality (Gronroos) –‘human factors’-attitude, responsiveness, friendly atmosphere How to sustain a competitive advantage (Jobber) –patents, continuous innovation –relationships, personality Is sustainable differentiation possible in TOps?

Industry structure free competition oligopoly monopoly Where does the UK tour ops sector stand barriers to entry horizontal and vertical integration political restrictions

Porter’s Five Forces defining industry competition Rivalry with direct competitors Threat of new entrants Threat of substitute products Bargaining power of buyers Bargaining power of suppliers Porter, M (1980) Competitive Strategy, New York, Macmillan p 4 Use this model to analyse the tour operations sector

Internationalisation Growth motives –economies of scale –home market saturated –spread the risks Market motives –potential demand –gaps or weaknesses in supply –exploit competitive strengths Competition motives

Market entry strategies Alliances Joint ventures Acquisition New ‘start-up’

Adaptation issues The new multi-national companies have unified bargaining power and economies of operations Are the national markets ready for global brands? Thomson TUI, Thomas Cook, Club Med Will the customers mix in the resort hotels?