1.  Part 2, Unit 4  The external environment:  PEST analysis  Tourism Strategy

2. Part 2: Strategic Analysis  Strategic analysis utilises techniques for situational analysis. This involves reporting on the current and future opportunities and threats and strengths and weaknesses facing the organisation.  Opportunities and threats summarise the external environmental factors that a tourism organisation faces. The key elements of the external environment may be summarised as C-PEST factors which refer to the competitive political economic socio-cultural, and, technological environments.  Of these, PEST factors are analysed in chapter 4, whilst the competitive environment is considered in chapter 5.  Strengths and weaknesses analysis summarises the state of the internal resources of an organisation. Resource analysis is undertaken in chapter 6.  All these factors are brought together in a comprehensive SWOT analysis at the end of chapter 6, thus concluding strategic analysis and part 2.

3. Reading BookCh Tribe, J, (2010) Strategy for Tourism, Goodfellow Publishers, Oxford. 4 Capon, C. (2008) Understanding Strategic Management, Prentice Hall: Hemel Hempstead. 2 Tribe, J. (2005) The Economics of Recreation, Leisure and Tourism, Butterworth Heinemann, Oxford. 8, 9 Johnson, G., Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy, Prentice Hall: Hemel Hempstead. 2

4. Learning Outcomes  After studying this chapter and related materials you should be able to understand: the political environment the economic environment the socio-cultural environment the technological environment  and critically evaluate, explain and apply the above concepts.

6. Discussion Point  What is the external environment?  What risks arise from the external environment?

7. Case Study 4: Tourism and the 2008 Economic Crisis  2008 can be added to the list of significant economic crises which include the Great Depression (1929-35) and the Asian Economic Crisis of 1997-8. By 2007 an unsustainable set of economic conditions were developing.  Two quarters of falling output in 2008 confirmed the arrival of a recession in both the UK and the US.  For tourism, the UNWTO predicted stagnation (0% growth) or even slight decline (-1% to -2%) throughout 2009. Amongst those most affected were the Americas and Europe as most of their source markets were affected by recession.

8. Case Study 4: Tourism and the 2008 Economic Crisis

9. Opportunities and threats in the changing political  Competition policy  Health and safety  Transport and infrastructure  Global carbon agreements and targets  Taxation and spending plans  Disability and access legislation  Foreign policy  Visa policy and home security  Regulation and deregulation  Regeneration plans  Employment and training policy  Travel advisories  Minimum wages

10. Political Environment: Aftermath of Kenyan unrest 2008

11. What are the key variables?  The economic environment affects organizations in the leisure and tourism sector in two main ways. Changes in the economic environment can affect the demand for an organization’s products Changes may affect an organization’s costs.

12. BorrowingEmploymentTaxes ExpectationsDisposable Income Benefits Government Expenditure Household Consumption Savings ExportsDemandImports InvestmentTourism Organisation The economic environment and demand

13. Opportunities and Threats in the Economic Environment OpportunitiesThreats Low interest ratesHigh interest rates Low unemploymentHigh unemployment High consumer expenditureLow consumer expenditure Low oil and other commodity prices High oil and other commodity prices Low TaxesHigh Taxes Favorable exchange rateUnfavorable exchange rate Stable pricesInflation Optimistic expectationsPessimistic Expectations

14. The Economic Environment for an airline VariableCommentsOpportunityThreat Interest Rates Employment Exchange Rate Taxes Economic Growth

15. The sociocultural environment  Factors in the socio-cultural environment of tourism entities include the size and structure of the population lifestyles and inter-cultural differences other factors (including attitudes and values about travel, availability of paid leave and unemployment) tourist motivations

16. The technological environment  The technological environment offers both opportunities and threats: Opportunities may be found in cheaper provision, or improvements in goods and services, in better marketing or easier distribution. However technology may result in an organisation's product or service becoming obsolete, or subject to new forms of competition.  The technological environment may be divided into Information Communication Technology and other technology.

17. Information Communication Technology  ICT relevant to tourism encompasses information search, purchase of services, post travel engagement and networking.  It includes information and reservation systems for airlines, hotels and attractions, timetables for transport systems, search engines (e.g. Google) online travel services (e.g. Expedia, Orbitz, Lastminute.com, Opodo, Travelocity and edreams), destination management systems (e.g. visitbritain.com), networking and web 2.0 portals (e.g. tripadvisor.com) and price comparison sites (e.g. travelsupermarket.com).

18. Other Technology  Other areas where technologies have had a significant impact on tourism include: Construction techniques - allowing faster erection of buildings. Bridge technology – extending access and cutting journey times. Materials – lighter and more durable materials. Glass – especially with better insulation properties. Fuels – e.g. biofuels. Energy – especially alternative sources of energy such as wind and solar power. Security scanning – which enables quicker and more accurate passenger checking at airports.

19.  Part 2, Unit 4  The external environment:  PEST analysis  The End Risk Management and Strategic Planning