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  • Internal Code :
  • Subject Code : HOS801
  • University :
  • Subject Name : Strategic Management

Strategic Management in Tourism and Hospitality

Contents

Introduction.

A brief history of the company and its strategic development

Current Organizational Structure.

Current Strategy and Goals: Corporate/ Business/ Functional

Analysis of the current strategy about external environmental factors of the company.

PEST Analysis.

Political factors.

Economic Factors.

Social factors.

Technological factors.

Porter’s Five Forces Model for Defining Competitiveness.

The threat of New Entrants

Threat of competition.

Threat of substitutes.

Bargaining power of supplier.

Bargaining power of the buyer.

Alignment of company’s current strategies with its external environment and competitive setting.

Analysis of the current strategy about internal environmental factors of the company.

Key resources of Intrepid Travel Group.

Competencies.

Strengths and Weaknesses of the company.

Major Issues.

Strategic Recommendations.

Conclusion.

References.

Introduction to Strategic Analysis of Intrepid Travel Group

Strategic analysis refers to the decisions, activities, and analysis of a company that is to be undertaken for creating and sustaining the competitive advantage for the business. Moreover, strategic analysis can be defined as the procedure of carrying out a study on an organization and its associated environment to form a strategy. This analysis usually entails the identification of data suitable for the company's strategy. It entails defining the internal and external environments that must be analyzed. Further, it makes use of certain analytic models like SWOT analysis, value chain analysis, and Porter’s five forces model (Baumgartner & Rauter, 2017). This report discusses the strategic analysis of the Intrepid Travel Group organization of the tourism and hospitality industry. Moreover, it describes the internal and external environment of the company and discusses the development of strategy at the corporate level. Furthermore, it contains the strategic recommendations for the next 12 months.

A Brief History of The Company and Its Strategic Development

Intrepid Travel Group is a travel and hospitality organization that is headquartered in Australia. It was established in the year 1988 by Darrell Wade. This company provides approximately 1000 guided tours worldwide. It is the largest division of the PEAK adventure travel group. Moreover, it is the joint venture of the intrepid travel group and the TUI group. It is specialized in organized tours, private tours, customized tours that appeal to numerous tourists by its special discounts. It can be said that this company has developed as a responsible tour operator that enables tourists to experience adventure trips in small groups. It began its services by purchasing its guesthouses or hotels and transportation facilities to offer supreme service in the tourism industry (Intrepid group, 2020 (a)).

Current Organizational Structure

An organizational structure can be defined as the system that represents how some activities are focused on achieving the goals of the company. It is governed by the board members who are chosen by the shareholders. The founder of the company is Darrell and he was the CEO of the company for 20 years. It uses the hierarchical structure in which workers are groups with workers having one clear supervisor. Grouping is based on aspects like the product, function, and more. All of the divisions and their managers come under the CEO of the company. In this company, the CEO comes in the first place and then its core management team in a pyramid responsible for carrying out the operations (Intrepid group, 2020 (b)).

Current Strategy and Goals: Corporate/ Business/ Functional

The goal of the company is to use the justifiable experience-rich travel to assist and permit the destinations and its people to flourish. The current strategy of the company is concentrated intensely on continuing to grow a digital outlook through the business and a promise to being the worldwide leader in responsible travel. Five guiding principles help the business to grow with purpose namely entrench purpose, leave a legacy, improve profitability, maintainable growth, and sustainable experience-rich travel. Additionally, the current goals of the company are a responsible business, leveraged DMC, digital outlook, be better, flexible independent travel, and right product to the right market. The Intrepid travel group has robust CSR practices that have been followed for numerous years. It takes care of all its stakeholders like customers, management, employees, government, investors, and more. Furthermore, it adopts sustainable business practices for carrying out the operations of the business. It is the carbon-neutral company as it has formed its carbon management program in the year 2010. Moreover, it discourages the tourists from engaging in actions exploiting the animals. It has banned the elephant riding on all its trips in the year 2014 (Intrepid group, 2020 (c))

Analysis of The Current Strategy About External Environmental Factors of The Company

PEST Analysis

This framework is used by the marketers of the company for examining the external business environment or macro-environmental factors that have an impact on the business. Moreover, this enables the company to identify its opportunities and threats. The external factors in PESTanalysis are political, economic, sociocultural, and technological that are described as follows in respect of the company (Ho, 2014).

Political factors

These factors relate to the rules and guidelines of the government that might impact the business in either a positive or negative manner (Barkauskas & Jasinskas, 2015). The Intrepid Travel Company is impacted by different political factors in both domestic as well as international markets. The Australian government has established numerous legal systems in respect of tax, tariffs, workplace equality, fair benefits, travel standards, and more. There have been rapid changes in the traveling rubrics, assaults, political disorder, and cold war that have created undesirable advertising and depress travelers from undertaking trips and tours. There is no doubt that the political stability of the Australian nation is offering numerous growth prospects and sustainability to the company.

Economic Factors

Economic factors are those that relate to interest rates, foreign exchange rates, unemployment, GDP growth rate, and more that can have an impact on the performance of the business. The intrepid travel group has indeed tackled numerous challenges in holding a higher level of performance due to the decrease in the GDP rate of the nation. Moreover, the inflation rate has been amplified from 1.9 percent to 2.1 percent for the year 2018. The company has earned higher profits by appealing customers with greater disposable income. However, certain economic factors harm the intrepid business like unstable currency rates, the growing rate of unemployment, and more.

Social factors

The socio-cultural factors are related to the culture, lifestyle, and desires, of the individuals about a service or product. Further, these factors entail demographic and cultural sides of the external environment of business. Every business must indeed respect the social customs and morals of each customer. In the tourism industry, there is a positive trend of cultural acceptance and this is also a positive thing for the Intrepid Company. Moreover, in the lifestyle of individuals, they are more influenced by the social pressures over the web that also has a positive impact on the business (Friel, 2019).

Technological factors

These factors are related to the rapid advancements in innovations and contemporary technologies. These advancements in technologies have created numerous prospects for the business (Kara, 2018). These technologies are constantly been used by the business in activities such as promotions, performance, feedback collection, customer relationship management, and many more aspects. However, the company is incurring many costs due to the rising cost of technology. Furthermore, the company has increased its investments for implementing more technological solutions in the business. Despite the leading travel and tour business of Australia, the company has maintained a robust online presence and implemented current technological variations to connect people via social media.

Porter’s Five Forces Model for Defining Competitiveness

To analyze the competitive power of the industry, porter's five forces model is designed that is the most primarily considered strategic tool for measuring the attractiveness of the industry. There are five forces of porter’s model that are described below in respect of the company (Hussein & Muchemi, 2019).

The threat of New Entrants

During the initial times when the company just entered the tourism industry, it has suffered from lots of challenges like lack of availability of resources and suppliers. However, this situation has now been changed with the advent of the internet. There is now the availability of numerous communication channels. Therefore, more people are attracted to this industry and creating more competition in the market. Certain barriers to entry in this market are expertise, differentiation, and more. Therefore, there is a moderate threat of entry in this industry.

Threat of competition

There is intense competition in the Australian tourism market due to the higher costs of inputs and unreliable economic environment. In Australia, all the tourism companies are offering affordable packages to attract customers for their services. Hence, this is the main reason for reduces the profit margins of the tourism industry in Australia.

Threat of substitutes

There is no doubt that the travel and tourism industry has lots of product choices that enable travelers to choose for a self-driving trip despite choosing a consistent agent for travel. In this industry, there are greater chances to imitate a novel business and progress fruitfully. Hence, there is a high threat of substitutes in this business.

Bargaining power of supplier

In the tourism businesses, there is a low threat of the suppliers as the major suppliers of business are its workers. Moreover, the bargaining power of the labor source is greater when there are rare individuals to fill the service segment of the industry. The intrepid travel group appreciates greater power while discussing prices with the suppliers that usually contains transportation, hotels, and more. Since the company has its self-owned hotels and aircraft hence; there is less cost of operations. Therefore, there is low bargaining power of suppliers (Knight & Cottrell, 2016).

Bargaining power of the buyer

In this industry, there is a high bargaining power of the customers as they have become more informed with prompt digitization. Thus, they can demand transparent prices for the services of the company. Therefore, there is a need for a company to design the packages taken into consideration the value-added services for the customers. 

Alignment of Company’s Current Strategies with Its External Environment and Competitive Setting

The current strategies of the company are in synchronization with the external environmental factors. As per the external environmental analysis conducted above, it can be said that there are ample of opportunities available for the business in terms of expansion of its business operations, novel innovations in its services, becoming a leader in performing the CSR practices and achieving the sustainable development goals set for Australia. Moreover, the intrepid travel group is fully prepared for the competition that exists in the market as it has a strategy to adopt differentiation and high-tech innovations in its activities. It is also true that the sustainability practices adopted by the company have been helping the business to build a robust competitive advantage in the industry (Runte, 2019).

Analysis of The Current Strategy About Internal Environmental Factors of The Company

Key resources of Intrepid Travel Group

There are two kinds of resources in business namely tangible and intangible. The tangible resources refer to those assessed completely and matched against the competitor’s resources. Intangible resources refer to those that can be assessed in the financial terms and are of utmost implication. The key resources of the company are defined as follows:

Human resources: The significant human resources of the company are its capable operational staff that are approximately 2400 globally and belong to 79 varied nationalities. All staff members are dependable, well-informed, and have decision-making abilities. All its human resources are the strength of the company's victory and competency. Further, the company is practicing a model of best fit as it ensures a close association between the staff and its performance for business.

Leadership style: Another key resource of the company is the leadership style of the managers. They use a participative style of leadership that enables all the staff members to take part in the decision-making of the company. 

Technology: Upgrading is an important resource that aids it to outperform in the presence of such an intense rivalry. It adopted modern technology in most of its actions. Also, its online presence over the web is much attractive to the clients (WATSON, 2019).

Intellectual property rights: The Intrepid travel group has an outreach to a large amount of IP rights that help it to cooperate successfully. Intellectual property rights are an important resource for the company as they are hard to access.

Brand name: The Company has made it's brand a trustworthy one in Australia that results in active footfall to its services.

Competence of management: The Corporation’s leadership and controlling team are very well-organized that they continually assess the macro environment and prepare the business to fight the competition.

Vigorous relationship with the suppliers: The capacity of the company to make a robust relationship with its dealers and merchants is great. It has robust relations with them that permit it to be effective in proposing the precise product at the sensible price and at the right time.

Competencies

There are many competencies of the company that are described as follows:

  • Good financial returns: The Company has been getting an enormous amount of profits by brilliantly acting in the industry for the past many years. Since 2016, it has CAGR of 18% and $ 28 m EBITDA till 2019.
  • Marketing capabilities: It accepts a high-class marketing strategy that helps it to verify that it is skillful to achieve considerably well.
  • Well-organized customer service: The Company is skillful to offer effective customer service even after the sales due to the presence of its punctilious and brilliant employees. The customers that have traveled using its services are approximately 460000 for the year 2019. 
  • Distribution strategy: The Company has its adaptable distribution strategy that is projected to improve its universal penetration and actuality that further supports high brilliance standards to approve the gratification of customers.

Strengths and Weaknesses of The Company

All the competencies of the company are its strengths and are in synchronization with the current strategy of the company. The biggest strength of the company is its environmental protection and insights on sustainability. Further, the key strengths of the company are in the form of constantly increasing revenue, highly skilled human resources to carry out the activities, its leadership style, and have competent marketing abilities. The weaknesses of the company are in the form of its poor abilities for mergers, acquisitions, and joint ventures. Further, there is a shortage of staff members at some times to handle such a big quantity of clients. The strategies must be made in regards to this.

Major Issues

The major issues that are arising in the business are as follows:

Low occupancies in the company: To increase its staff, the company must have to amplify the number of job openings and must hire suitable candidates.

Highly unresolved cased of customer complaints: Due to the shortage of staff in the company, numerous clients fail to get good service from employees, and thus this forces the clients to lodge complaints.

Limited revenue generation streams: Furthermore, the company must expand its business activities. It must add some novel businesses into its existing one to create more revenue streams.

Strategic Recommendations on Strategic Management in Tourism and Hospitality

The most urgent recommendation for the survival of the business is that it must reduce its customer complaints as a customer is to be satisfied at each stage of the transaction by the business. Furthermore, it must make use of lucrative expansion approaches to enter into fruitful acquisition, mergers, and joint ventures. It enables them to make the finest use of novel and evolving markets based in other countries. Moreover, it must focus on capitalizing in the preservation of high-end workplaces and bringing increased value to shareholders. It must focus more on market research for increasing its competitiveness.

Conclusion on Strategic Management in Tourism and Hospitality

From the above strategic analysis of the Intrepid Travel Group, it can be concluded that it is the energetic travel and tourism company that is the second major export service of the world. Moreover, the company is making its constant efforts in providing innovative services to its clients. Furthermore, it has plentiful of competencies that are responsible for its reputation in the market.

References for Strategic Management in Tourism and Hospitality

Barkauskas, V., & Jasinskas, E. (2015). Analysis of macro-environmental factors influencing the development of rural tourism: Lithuanian case. Procedia-Social and Behavioral Sciences213, 167-172.

Baumgartner, R. J., & Rauter, R. (2017). Strategic perspectives of corporate sustainability management to develop a sustainable organization. Journal of Cleaner Production140, 81-92.

Friel, M. (2019). Tourism as a driver in the space economy: new products for intrepid travelers. Current Issues in Tourism, 1-6.

Ho, J. K. K. (2014). Formulation of Systemic PEST analysis for strategic analysis. European Academic Research2(5), 6478-6492.

Hussein, S. S., & Muchemi, A. (2019). Michael Porter's five forces on the performance of savings and credit cooperative societies in Nairobi City County, Kenya. International Academic Journal of Human Resource and Business Administration3(7), 14-35.

Intrepid group (2020 (a)). About us. Retrieved from https://www.intrepidgroup.travel/about-us

Intrepid group (2020 (b)). Our people. Retrieved from https://www.intrepidgroup.travel/about-us/our-people

Intrepid group (2020 (c)). Annual report 2019. Retrieved from https://www.intrepidgroup.travel/sites/default/files/202004/Intrepid_2019_Integrated_Annual_Report.pdf

Kara, E. (2018). A contemporary approach for strategic management in tourism sector: pestel analysis on the city Muğla, Turkey. İşletme Araştırmaları Dergisi10(2), 598-608.

Knight, D. W., & Cottrell, S. P. (2016). Evaluating tourism-linked empowerment in Cuzco, Peru. Annals of Tourism Research56, 32-47.

Runte, C. (2019). Corporate Social Responsibility Management in tourism business: The impact of TUI Group and Intrepid Group on low-and middle-income countries.

WATSON, A. (2019). Using Ethnography and Narrative Analysis to Uncover Customer Agency: Intrepid Travel's Online Booking Project. In Ethnographic Praxis in Industry Conference Proceedings (Vol. 2019, No. 1, pp. 170-186).

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