­­­­­­­­­­­ America, New York. Strategy Plan Black Tomato works

­­­­­­­­­­­ BLACK TOMATO – TRAVEL AND TOURISM INDUSTRY

Black Tomato is a luxury travel company that specialises in
creating unique tailor made experiences for its clients. It is a dream child of
three travellers who left their corporate world behind, to follow their dream
and passion of exploring the world. Their mission is to make sure every
customer leaves a mark behind the journey of exploring the world. `

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Black Tomato has adopted a style of focus strategy, where
they tailor their products to the needs of their customers. They believe in the
nature of Differentiation which sets them apart. They cater to all age groups
of travellers with an intention to give them back inspiration and memories.
They aim to be the world’s largest travel and tourism company, having Head
Quarters located in the United Kingdom and branch office in the United States of
America, New York.  

Strategy
Plan

Black Tomato works in a completely different manner when
compared to its competitors. Their services creates value for the firms and its
customers. They do this by believing in delivering efforts ought to take the
value created by competitors actions as their benchmark. The fundamental
principle of the company is to create value and they are doing this by
differentiating their products from other companies. Their product range
differs as there is no such thing as package tour; no two experiences are same
because no two requests are similar and this differs them from other companies,
which brings a uniqueness in their strategy. A salient feature of their product
offering is the expertise they acquired having travelled to the destinations
which they recommend to their clients. Extra value added services are also
being imposed by the company to its clients as a complementary, which sets them
apart as it leaves a sense of excitement and anxiety to its clients. Increasing
organizational effectiveness through manager and employee collaboration and
through sharing power and control makes them successful in bringing value to
customers. Added value through differentiation has caused an increase in
profits, as a result customers are willing to pay higher prices. This generic
strategy attempts to gain competitive advantage and from here on it leads to
the competitive strategy. The below diagram represents the position of the
company in the Cost, prices and profits for generic strategies.

 

 

 

The important strategy here is how they are successful in creating
value for their customers and they do this by adopting intangible differentiation
method, where they build a strong relationship with their clients. The nature
of differentiation is a focused differentiation strategy, which is being used
by them.

Evaluation of Key Stakeholders

After analysing the type of strategy used, there must be a key
asset behind this to implement all the above said strategies. They are the
company’s stakeholders, who play a vital role in the decision making and
development of the company. Stakeholders are nothing but an organisation in
itself who can affect the whole performance of the system. The key stakeholders
of this company are shown using the Mendelow model of mapping stakeholder.

Possible
Entry Mode

According to the mapping of the stakeholders, it can be said that
Black Tomato keeps good relationship and keeps satisfied all the external
stakeholders along with the internal stakeholders. This strategy keeps them
different from others and leads to their success and growth in the industry
year by year. Keeping this growth in mind, one can say that there is a high
possibility for Black Tomato to spread its wings away from its current region. The
mode is to launch as a wholly owned subsidiary, where 100 percent stocks are
owned by the parent company. Having wings in UK and USA, the next entry could
be towards the Asian Continents, for example India or China. According to the
report by World Travel Market London, it can be seen that there were 41 Asian
Countries ranking of the top 100 destinations by international arrival numbers
and now it can be expected to grow by 47 cities in 2025 (Geerts,2017).

Travel and
Tourism

Travel and tourism industry is a very high developing profitable
industry in the coming future. According to World Tourism Organisation, there
is an increase in the demand of city tourism, as it has many financial
advantages. They are as follows – it can bring substantial economic benefits to
the cities and its citizens and also plays a vital role in gaining economic,
social and environmental stability of that particular country (UNWTO, 2012).  It can be argued that the role of tourism for
the different cities is rising, as tourism is being concluded as a strong
channel for bringing different types of socio economic benefits to the local
communities around the world.

Regardless of the increasing and unpredictable shocks from terrorist
attacks, political instability, health pandemics, and natural disasters, Travel
and Tourism continued to show a positive response in 2016. Sixth time in
the row, growth in this sector outpaced that of the global economy. From the
view point of my industry that is leisure travel (2017), it remains sturdy.
This industry also has full support from the government bodies as they are
investing in the necessary infrastructure required. The social and economic
benefits from this industry is that it provides jobs, generates wealth around
the world (Scowsill, 2017) 

 

Macro Environmental
Aspects

Travel and Tourism
Industry is the next emerging industry, with lot of options and opportunities
available to grow as a company, provided with the right strategy. As the
strategy can be interpreted as the interface between the organisation and
environment. Organisational environment can be defined as all exterior elements
involved indirectly with the organisation and have the ability to affect all or
part of the business. As key stake holder’s role, demands to determine whether
a structure is suitable for their industry or not. A coherent structure will
collapse rather than creating value if it fails to meet the capabilities and
resources to opportunities within its business environment. For a smooth
growing structure for a firm depends on the environmental circumstances it
faces (Besanko, et al 2007). The environment is usually unstable, turbulent,
complex, difficult to influence. Its analysis is critical even if we approach
directly or indirectly.

PEST analysis is a
tool for analysing macro environment. This framework helps managers understand
the key reasons for variation and also the result of these external influences
on the industry and Black Tomato. Black Tomato PEST analysis and its reports are
as follows –

Political Aspects-   According to Koutrakos,
UK’s travel and tourism industry might be affected by the Brexit, as it makes
it more difficult to employ citizens from EU Member states. The employment
process for the company would be slower and more expensive. Also there is a
possibility on the rights of EU law to be same, and if so, to what extent will
it be, is uncertain (Koutrakos, 2016). Surprisingly the impact of Brexit on the
tourism industry will depend on the wider economic health of the UK (Cass, 2016). The new travel package directive is yet to be out and this company should check if their
trading terms are clear and effective to ensure smooth functioning of its
services with customers and suppliers. Also Insurance policies and covers to be
considered because uncertainties over brexit implications might delay our
performance.

Economic Aspects – Demand, costs, prices and profits are all dependant on the
economic factors of the travel and tourism industry. Luxury travel is an income elastic business, so if income
increases or decreases, it can have an effect on the demand. As
the current economic violation increases, luxury travellers might become
increasingly value-driven and this might lead to travellers spending less (Worthington,
2017).

The total contribution of travel and tourism to GDP in an Asian
Continent like India was INR14,018.5bn (USD208.9bn) which is 9.6% of GDP in
2016 and in 2017 it rose by 6.7% and by the end of 2027 it is going to rise by
6.7% pa to  INR28,491.8bn (USD424.5bn),
10.0% of GDP in 2027 (Scowsill, 2017). The below graphical representation
explains the above said words.

 

 

Social
Aspects – Social
Change can have a major influence on firm’s strategies. Migration of people can
open new business opportunities. Luxury travellers are usually preferred by old
age pensioners or only on special occasions like honeymoon etc. Income
Distribution also plays an important role, when there is fall in income, they
would not prefer luxury travel (Frynas and Mellahi, 2015)

For an Asian continent like India Travel
& Tourism Industry generated 25,925,500 jobs directly in 2017 (5.8% of
total employment) By 2027, Travel & Tourism will account for 31,910,000
jobs directly, an increase of 2.1% pa over the next ten years. The below graph
shows the social impact when it comes to employment opportunities growth
(Scowsill, 2017)

 

Technological Aspects – The emergence of the Internet
and its uses, leads to reduced costs and increases efficiency within the
industry. With the help of fine technology, the business can explore to all the
regions left in the industry. Thus, creating opportunities to grow.

 

The result of this analyses showcases that the current
environment aspects of the UK are quite challenging, but still favourable to
their industry. It might come to a situation, where the business remains on the
line but still favourable. As a growing company with high potential growth
needs to expand their wings overseas. Entering different market will open new
gates of opportunities for them. According to the report, within the next 10
years the growth in Luxury travel trips is estimated to rise and approximately
be at 6.2 percent, almost a third greater than overall travel (4.8 %).  The report also says that by the end of 2025,
Asia’s Luxury travel market will see faster overall growth when compared to Europe’s
(Dykins, 2016).

Competitive Dynamics

If the company wants to expand then Micro Analyses should be
conducted to have a better detail picture of the industry. To be one step ahead
of the competitors, one must know their competitors. The 5 Porters Factor
Theory can be used to analyse different aspects of expansion and they are as
follows;

Threat Of New Entrants

Bargaining power of Suppliers

Competitive Rivalry

Bargaining power of Buyers

Threat of Substitutes

Product Differentiation
Huge Investments
Different Government Policies
Access to different properties
Foreign Currency
High

Suppliers Product Differentiation
Possess a credible threat of
withdrawing
High demand in Cost
Many alternatives
Medium

Equally balanced companies in this industry
Lack of Differentiation
High Fixed Costs
High Exit barriers
High

Low cost demand
Demand in this industry is elastic
Switching Cost to use new
operator
Low Loyalty
Very High
 

Competition from other rivals to
produce at a lower price
Recreational activities at home
Domestic Travel
Economy Class Travel
Day outing
Medium

 

 

Strategic Actions

Considering all the
above reports, the best way for Black Tomato to expand is buy entering Indian market
as the legal and political aspects of the region are in the favour of the
industry. India has the second largest population in the world, in addition to
the fast growing economy in the world. The main reason could be India’s outbound
market is rising with a strong economic and political climate, which is making
more Indians to travel, may be for the first time (Kelly, 2017). Market
opportunities increase rapidly and they can gain more resources in order to win
more clients. The right time for them to invade India is now, as the stats say
that by 2025, this industry will be highly profitable in all the terms. They
have Differentiation advantages over their competitors as well as they can gain
First mover advantage because of their product range. Thus, with 100% of
Investment allowed by the government and the uniquely designed and defined
offerings by the key stakeholders to Black Tomato has allowed 100% autonomy and
independence in running of the company in the overseas market with any presence
or pressure of External Shareholders.

The best strategy
for Black Tomato could be to enter India as a wholly owned subsidiary because
of the following advantages;

Wholly Owned
Subsidiary

Ease
 

Control
 

Resource Commitment

 

Flexibility
 

Ownership
 

 

Low

High

High

Low

High

 

By this they will
have high involvement of their key stakeholders, which will improve the
performance of their delivery system. With high control, comes high risk.  The graph below represents the level of risk
with the power of control, where if the company’s entry mode is enter as a
wholly owned subsidiary.

 

 

 

References:

BESANKO, D.,
DRANOVE, D., SHANLEY, M. and SCHAEFER, S., eds, 2007. Economics Of Strategy
( Pg 524 ). Fourth Edition edn. Hoboken: John Wiley and Sons.

CASS, I.,
2016. Guardian Small Business Network , EU referendum panel. https://www.theguardian.com/small-business-network/2016/may/11/what-brexit-uk-travel-tourism-industry-visas
edn. UK: The Guardian.

DYKINS , R.,
2016. Shaping the Future of Luxury Travel Future Traveller Tribes 2030. Amadeus.

FRYNAS, G.
and MELLAHI, K., eds, 2015. Global Strategic Management. Third Edition
edn. Oxford University Press.

GEERTS, W.,
2017. Asian Cities soar up the global travel league table
. https://news.wtm.com/asian-cities-soar-up-the-global-travel-league-table/
edn. London: World Travel Market.

KAUTRAKOS,
P., 2016. Guardian Small Business Network EU referendum panel. https://www.theguardian.com/small-business-network/2016/may/11/what-brexit-uk-travel-tourism-industry-visas
edn. UK: The Guardian.

KELLY, J.,
2017. India Outbound. Uk: Mintel Group Ltd.

SCOWSILL, D.,
2017. TRAVEL & TOURISM GLOBAL ECONOMIC IMPACT & ISSUES. https://www.wttc.org/-/media/files/reports/economic-impact-research/2017-documents/global-economic-impact-and-issues-2017.pdf
edn. London: World Travel And Tourism Council.

UNWTO, 2012. Global
Report on City Tourism – Cities 2012 Project. volume 6. Madrid: World
Tourism Organisation.

WORTHINGTON,
J., 2017. Luxury Travel , UK. UK: Mintel Group Ltd.

 

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