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Cover Page 1.

Name: Pham Thuy Duong,(2430318) Class: DIM1VC

2. Name: Ivander Laurentius Atmojo (2430243) Class: DIM1VA

3. Name: Corhana Dan Andrei (2430403) Class: DIM1VA

4. Name: Gework Petrosjan (2431488) Class: DIM1VB

5. Name: Mohammed Ababakar (2431451) Class: DIM1VB

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Table of Contents
Chapter 1 Introduction ......................................................................................................................... 5 Chapter 2. European Travel Industry Overview .................................................................................... 6 2.1What is travel industry? ................................................................................................................... 6 2.2 European Travel Industry ................................................................................................................ 6 2.3. Business Model .............................................................................................................................. 9 2.5 Daughter companies of TUI and Thomas Cook ............................................................................ 13 2.6 Competitors of TUI and Thomas Cook .......................................................................................... 16 Chapter 3 Financial Analysis ............................................................................................................... 20 3.1.1 Thomas Cook Group PLC and TUI Travel PLC Key Figures Compared ......................................... 21 3.1.2 Profit & Loss Account Compared ............................................................................................... 23 3.1.3 Thomas Cook Group PLC and TUI Travel PLC Balance Sheet Compared .................................... 24 3.2 Profit Margin Analysis ........................................................................................................... 25 3.2.3 Profit Margin Analysis ............................................................................................................ 27 3.3.1 RETURN ON TOTAL ASSETS ANALYSIS .................................................................................... 31 3.4.1 Return on Stockholder Equity Analysis. ................................................................................. 35 3.5 Liquidity Ratios.............................................................................................................................. 41 3.5.2 Current Ratio Analysis ............................................................................................................ 42 3.6 Leverage Ratios ............................................................................................................................. 50 3.6.2 Debt to Asset Ratio analysis ................................................................................................... 51 3.6.4 Debts to Equity Ratio Analysis.................................................................................................... 53 3.7 Financial Analysis Summary ...................................................................................................... 54 3.7.1 Financial Analysis Conclusion ................................................................................................. 57 Chapter 4: Marketing ...................................................................................................................... 58 4.1. Mission statement: .............................................................................................................. 58 4.2. SWOT Analysis: .................................................................................................................... 59 4.3. Strategic Objectives: ............................................................................................................ 61 4.4. Market position:................................................................................................................... 64 4.5. Product and Service: ............................................................................................................ 76 4.5.1. TUI travel plc ..................................................................................................................... 76 4.5.2. Thomas Cook..................................................................................................................... 80 4.5.3. Financial Services related travel of TUI travel plc and Thomas Cook: ............................... 81 Page | 2

4.6. The Boston Consulting Group box (BCG matrix)................................................................... 84 4.7. Supply chain: ........................................................................................................................ 85 4.8. Price ..................................................................................................................................... 88 4.9. Promotion ............................................................................................................................ 89 4.10. Distribution ........................................................................................................................ 94 4.10.1. Booking Routes ............................................................................................................... 94 4.10.2. Distribution channels ...................................................................................................... 95 4.10.3. Cross Channel Marketing ................................................................................................ 95 4.11. Ecommerce ........................................................................................................................ 96 4.12. Conlusion for Marketing chapter ....................................................................................... 98 Chapter 5 Management and Organization: ..................................................................................... 98 5.1. Company Profile ................................................................................................................... 99 5.1.1. Company Background ........................................................................................................... 99 5.1.2. Company Scale ................................................................................................................ 101 5.1.3. Mission Statement .......................................................................................................... 101 5.3.4. Vision and Values: ........................................................................................................... 102 5.3.5. Sustainability Development and Social Responsibility .................................................... 103 5.2. Company Organization ....................................................................................................... 106 5.2.1. Organizational structures .................................................................................................... 106 5.3. Human Resources Management ........................................................................................ 109 5.3.1. Recruitment ........................................................................................................................ 109 5.3.1.1.TUI Travel plc .................................................................................................................... 109 5.3.1.2. Thomas Cook................................................................................................................ 113 5.3.2. Job Selection ................................................................................................................... 114 5.3.2.1.Finland TUI .................................................................................................................... 114 5.3.2.2. Finland Thomas Cook ................................................................................................... 116 5.3.3.1.Germany TUI ................................................................................................................. 116 5.3.3.1. Germany (Thomas cook) .............................................................................................. 117 5.3.3.Emloyee engagement ...................................................................................................... 118 5.3.4. Personal expenses ........................................................................................................... 119 5.4. Conclusion.......................................................................................................................... 119 Chapter 6 Key Performance Indicators ............................................................................................. 120 6.1 Financial ..................................................................................................................................... 120 6.2 Marketing ................................................................................................................................... 123 Page | 3

6.2.3 Marketing Key Performance Indicators.................................................................................... 124 6.2.3.1 Mission Statement ................................................................................................................ 124 6.2.3.2 SWOT Analysis ...................................................................................................................... 124 6.2.3.3 Strategic Objective ................................................................................................................ 127 6.2.4 Market Position........................................................................................................................ 128 6.2.4.1 Market Dynamics UK & Ireland ............................................................................................. 128 6.2.4.2 Market Dynamics Continental Europe .................................................................................. 129 6.2.4.3 Market Dynamic Northern Europe: ....................................................................................... 130 6.2.4.4 Market Dynamics North America .......................................................................................... 131 6.2.4.5 Market Dynamics Germany................................................................................................... 132 6.2.5 BCG MATRIX ............................................................................................................................. 133 6.2.6 Distribution Channels............................................................................................................... 134 6.3 Management Key Performance Indicators .............................................................................. 135 6.3.3.1Company profile............................................................................................................. 135 6.3.3.1.1Mission Statement ...................................................................................................... 135 6.3.3.1.2 Vision and Mission ..................................................................................................... 136 6.3.3.1.3 Sustainability Development ....................................................................................... 136 6.3.3.2Company Organisation................................................................................................... 139 6.3.3.2.1 Organizational Structures........................................................................................... 139 6.3.3.2.1 Departmentalization .................................................................................................. 140 6.3.3.2.2 Recruitment Plan........................................................................................................ 141 Chapter 7. References....................................................................................................................... 142 FINANCIAL APPENDICES ................................................................................................................ 144 Appendixes 3 .................................................................................................................................... 153 Cooperation Agreement Group 6 (Period 4) ..................................................................................... 171

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Chapter 1 Introduction
In this semester, our task is to set a bench mark based on quick scan on two travel companies--UI and Thomas Cook. Through the comparison of Key Performance Indicators (such as mission, strategy, market share, turnover, export ability, financial conditions etc.), we will come to a conclusion which one is better. In our analyzing procedure, we are going to use the external and internal analysis where we have much experience and interview method in real context. By those efficient tools, we will draw a full picture of two selected companies. The main phrases consist of two steps. First of all, we will measure them from each comparable aspect and then pose our constructive conclusions based on a range of data analysis and interpreting.

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Chapter 2. European Travel Industry Overview


2.1What is travel industry?
Travel (or Tourism) is going for entertainment, leisure or business purposes. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for more than twenty-four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited".

2.2 European Travel Industry


Geography Conventionally, Europe is one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally divided from Asia to its east by the water divide of the Ural Mountains, the Ural River, the Caspian Sea, the Caucasus Mountains (or the KumaManych Depression), and the Black Sea to the southeast. Europe is bordered by the Arctic Ocean and other bodies of water to the north, the Atlantic Ocean to the west, the Mediterranean Sea to the south, and the Black Sea and connected waterways to the southeast. Yet the borders for Europe-a concept dating back to classical antiquity-are somewhat arbitrary, as the term continent can refer to a cultural and political distinction or a physiographic one. Europe is the world's second-smallest continent by surface area, covering about 10,180,000 square kilometers (3,930,000 sq mi) or 2% of the Earth's surface and about 6.8% of its land area. Of Europe's approximately 50 states, Russia is the largest by both area and population, while Vatican City is the smallest. Europe is the third-most populous continent after Asia and Africa, with a population of 731 million or about 11% of the world's population. However, according to the United Nations (medium estimate), Europe's share may fall to about 7% by 2050. In 1900, Europe's share of the world's population was 25%. Europe, in particular Ancient Greece, is the birthplace of Western culture. It played a predominant role in global affairs from the 16th century onwards, especially after the
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beginning of colonialism. Between the 16th and 20th centuries, European nations controlled at various times the Americas, most of Africa, Oceania, and large portions of Asia. Both World Wars were largely focused upon Europe, greatly contributing to a decline in Western European dominance in world affairs by the mid-20th century as the United States and Soviet Union took prominence. During the Cold War, Europe was divided along the Iron Curtain between NATO in the west and the Warsaw Pact in the east. European integration led to the formation of the Council of Europe and the European Union in Western Europe, both of which have been expanding eastward since the fall of the Soviet Union in 1991. Profile of European Market of Travel Industry Through Europe is the world's second-smallest continent, European countries are attractive destinations international tourists. Total outbound travel increased by an average of 2.7% per year between 2003 and 2006 to 327 million. Europe is the main destination with a share of over 80%. Non-European destinations make up less than 20% of the trips made by EU citizens. Between 2003 and 2006, the number of arrivals to European destinations increased by an average of 1.7% per year. According to World Tourism Organization, most of the top visited countries continue to be on the European continent. Rank Country UNWTO Regional Market Europe North America Europe Asia Europe Europe Europe Europe Europe North America International International International tourist tourist tourist arrivals arrivals arrivals (2008)[9] (2007)[3][9] (2006)[10] 79.3 million 81.9 million 78.9 million 58.0 million 56.0 million 51.0 million 57.3 million 53.0 million 42.7 million 30.2 million 25.4 million 25.0 million 24.9 million 22.6 million 58.7 million 54.7 million 43.7 million 30.9 million 23.1 million 22.2 million 24.4 million 21.4 million 58.2 million 49.9 million 41.1 million 30.7 million 18.9 million 18.9 million 23.5 million 21.4 million

1 2 3 4 5 6 7 8 9 10

France United States Spain China Italy United Kingdom Ukraine Turkey Germany Mexico

The World Tourism Organization (WTO) predicts a total number international arrivals are expected to reach 1 billion, and 1.6 billion of tourist arrivals from Europe in 2020. This is a yearly increase of 6.1% starting from 2000. The most popular destinations will be the Americas, followed by East Asia Pacific, the Middle East, Africa and South Asia. Western Europe and Northern Europe are expected to be the most important originating regions. Common travel trends in Europe Leisure travel
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Leisure travel was associated with the Industrial Revolution in the United Kingdom the first European country to promote leisure time to the increasing industrial population. The British origin of this new industry is reflected in many place names. In Nice, France, one of the first and best-established holiday resorts on the French Riviera, the long esplanade along the seafront is known to this day as the Promenade des Anglais; in many other historic resorts in continental Europe, old, well-established palace hotels have names like the Hotel Bristol, the Hotel Carlton or the Hotel Majestic reflecting the dominance of English customers. Winter tourism Approximately 927 ski resorts are located in the various European countries (e.g. Austria, Bulgaria, Czech Republic, France, Germany, Iceland, Italy, Norway, Poland, Sweden, Slovakia, Spain, and Switzerland) Mass tourism Mass tourism could only have developed with the improvements in technology, allowing the transport of large numbers of people in a short space of time to places of leisure interest, so that greater numbers of people could begin to enjoy the benefits of leisure time. Adjectival tourism For a more comprehensive list, see List of adjectival tourisms. Adjectival tourism refers to the numerous niche or specialty travel forms of tourism that have emerged over the years, each with its own adjective. Many of these have come into common use by the tourism industry and academics. Others are emerging concepts that may or may not gain popular usage. Examples of the more common niche tourism markets include: * Agritourism * Medical tourism * Culinary tourism * Nautical tourism * Cultural tourism * Pop-culture tourism * Ecotourism * Poverty tourism * Extreme tourism * Religious tourism * Geotourism * Space tourism * Heritage tourism * War tourism * LGBT tourism * Wildlife tourism

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2.3. Business Model


Holidays and trips can reach the final consumer in various ways. Business model present how travel industry produce the values for their customers in order to receive profit in return. Outbound tour operators In general, an outbound tour operator offers a complete package to the inclusive tour traveller, consisting of transport (airline seats), accommodation (hotel), excursions and more. The outbound tour operator, therefore, cooperates with an inbound tour operator in the destination country who selects elements such as accommodation, catering and excursions. The outbound tour operator offers the product via travel agencies or directly to consumers through the Internet. It is becoming increasingly common that packages can be composed of individual modules that the traveler can select him or herself. Major and specialized tour operators In general, two kinds of tour operators can be found: major tour operators and specialist tour operators. Major tour operators generate most of their volumes through popular, standardized mass-market products (sun, sea, sand). In the EU, a small number of mainly German and British players dominate the tour operator market. Some examples are TUI (http://www.tuigroup.com), Thomas Cook (http://www.thomascook.com), Rewe/LTU (http://www.rewetouristik.com), First Choice (http://www.firstchoice.co.uk) and Kuoni (http://www.kuoni.com). Specialized tour operators concentrate on niche markets currently not being served by the major operators. However, the tourism market is changing and major operators realize that they will have to meet individual consumer demand to keep their clients. Some large tour operators have set up specialized branches as well, operating under separate trade names, to serve special segments in the market. Big and smaller players are all fighting for their market position, resulting in fierce competition and, moreover, an increasing number of consumers are looking for lower prices. Member organizations Another potential channel consists of member organizations, acting as tour operators. There is an increasing tendency among organizations, clubs, sporting teams and/or more organized parties to organize holiday trips and offer them to their members. They book all foreign accommodation themselves and act as tour operators for their members. Another possibility is to cooperate with a tour operator specialized in their field of interest. Examples are clubs of mountaineers that go climbing together, diving clubs that travel to the Antilles and fishermen who organize foreign fishing holidays together. Loyalty organizations, such as the Dutch Airmiles, can also be included in this channel.

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Inbound tour operators (local agents) Inbound tour operators are the vital link between DC tourism suppliers and EU outbound tour operators. Inbound tour operators represent local tourism suppliers, like hotels, bus companies and organizers of activities and promote and sell travel packages to outbound tour operators and travel agencies. According to interviews with EU tour operators, almost all bookings take place through the intervention of an inbound tour operator. Thomas Cook Business Model

TUI Business Model

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CAR RENTAL COMPANIES

BOAT COMPANES

AIRLINE FIRMS

TRAIN COMPANY

ADVERTISING COMPANIES

MULTIMEDIA COMPANIES

PR AGENCIES

HOTELS

MOTELS

HOSTELS

CAMPING COMPANIES

RESTAURENTS

CATERING COMPANIES

VISTING PLACES

ENTERTAIMENT PLACES

ENTERTAINMENTAL EVENT COMPANIES

TRANPORT

MARKETING

ACCOMODATION

CATERING

ENTERTAINMENT

INBOUND TOUR OPERATORS

CLUBS MENBER ORGANIZATIONS SPORT TEAMS OUTBOUND TOUR OPERATORS SPECIALISED TOUR OPERATERS

ORGANIZED PARTIES TRAVEL AGENCIES

INCLUSIVE TOUR TRAVELLERS

IDEPENDENT TRAVELLERS

Table 3.1: Travel Industry Business Model.


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2.4. Business partners in Travel industry (European market)


5.1 Firms in European Travel Industry

Travel and Tourism Company Central-Eastern Europe 7401 663 1313 728 2932 656 Western Europe 5431 398 1169 706 1233 78

Travel agents, tour operators Tourism promotion offices Tourist coach services Tourism and recreational consultants Tourist, leisure and sports centers Meeting and people finder services Accommodation

Hotels and motels Hotel reservation services Hotel, restaurant and bar operators Hotel, restaurant and leisure property owners Restaurants Catering services Holiday camps and tourist complexes

Central-Eastern Europe 7167 1323 863 700 7594 2277 1714

Western Europe 15231 290 1251 168 2633 3575 400

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Transportation Central-Eastern Europe 383 426 47 Western Europe 580 1337 114

Airline companies Coaches, buses, minibuses hire & rent Ship. ocean-going company Travel Insurance

Travel insurance company

Central-Eastern Europe 842

Western Europe 1082

2.5 Daughter companies of TUI and Thomas Cook


TUI Travel PLC TUI Travel has over 200 brands which are comprised of market- leading mainstream brands and specialist travel businesses. Selections of our well-known brands include TUI, Thomson, Fritidsresor, Nouvelles Frontires, The Moorings, Quark, LateRooms.com, Hotelbeds.com, Hayes & Jarvis and Turchese.

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Thomas Cook Group plc Thomas Cook Group operates a portfolio of market-leading travel brands in 21 markets.

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2.6 Competitors of TUI and Thomas Cook


In general, two kinds of tour operators can be found: major tour operators and specialist tour operators. Major tour operators generate most of their volumes through popular, standardized mass-market products (sun, sea, sand). In EU, a small number of mainly German and British players dominate the tour operator market. Some examples of their main competitors are Rewe/LTU, First Choice and Kuoni. Specialized tour operators concentrate on niche markets currently not being served be the major operators. However, the tourism market is changing and major operators realize that they will have to meet individual consumer demand to keep their client. Some large tour operators have set up specialized branches as well, operating under separate trade names, to serve special segments in the markets. Big and smaller players are all fighting for their market position, resulting in fierce competition and, moreover, an increasing number of consumers are looking for lower prices. Below it is a rough picture of their competitors.

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Chapter 3 Financial Analysis


Introduction In this chapter we are going to compare Thomas Cook Group PLC with TUI Travel PLC from 2006 up to 2009. We will present a comparison of Key Figures from both companies from 2006 to 2009. Which will present the significant differences between the two companies. Then we will present a comparison of Profit and Loss Account of both companies, and we will analyze deeper in matters of Profit Ratio, Liquidity Ratio, Leverage Ratio, Share Holder Return Ratio, Revenue and Cost ratio, Underlying Revenue and Operating Profit compared to the two companys Statutory Revenue and Operating Profit. An explanation of growth or decrease of ratios or in variance between Underlying Revenue and / Underlying Operating Profit compared to the Statutory Revenue and / Operating Profit will be given in each year. We will also present a comparison between Thomas Cook Group PLC and TUI Travel PLC Balance Sheet for 4 years from 2006 to 2007. Please note that there will be some differences in value, and numbers from the data presented and the analysis since some data were collected in different months and different sources. Financial Performance Indicators Profit Ratios Profit ratios measure the efficiency with which the company uses its resources. The more efficient the company, the greater is its profitability. It is useful to compare a company's profitability against that of its major competitors in its industry. Such a comparison tells whether the company is operating more or less efficiently than its rivals. In addition, the change in a company's profit ratios over time tells whether its performance is improving or declining. A number of different profit ratios can be used, and each of them measures a different aspect of a company's performance. The most commonly used profit ratios are gross profit margin, net profit margin, return on total assets, and return on stockholders' equity. Liquidity Ratios A company's liquidity is a measure of its ability to meet short-term obligations. An asset is deemed liquid if it can be readily converted into cash. Liquid assets are current assets such as cash, marketable securities, accounts receivable, and so on. Two commonly used liquidity ratios are current ratio and quick ratio. Leverage Ratios A company is said to be highly leveraged if it uses more debt than equity, including stock and retained earnings. The balance between debt and equity is called the capital structure. The optimal capital structure is determined by the individual company. Debt has a lower cost because creditors take less risk; they know they will get their interest and principal. However, debt can be risky to the firm because if enough profit is not made to cover the interest and principal payments, bankruptcy can occur.

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3.1.1 Thomas Cook Group PLC and TUI Travel PLC Key Figures Compared
KEY FIGURES1 Year Ended 30 September Earings Per Share Basic (p) Earings Per Share Diluted (p) Earings Per Share Adjusted (p) Earnings Per Share Growth (%) Total Dividend (p) Operating Margin (%) ROCE (%) Dividend Cover Dividend Yield Price / Earnings Ratio Dividend Per Share Growth(%) 2009 1.9 1.8 26.4 n/a 10.75 2 -53 2.46 4.6 8.8 1 Thomas Cook Group PLC 2008 2007 2006 5.01 22 0.35 5.01 22 0.35 26.26 39.9 0.25 -34 60 n/a 10.62 5 n/a 2 2 3 288 215 180 2.47 7.98 n/a 4.8 1.7 n/a 8.4 7.5 n/a 112 n/a n/a 2009 -1 -1 23.8 17 10.7 0 5 2.22 4.2 10.7 10 TUI Travel PLC 2008 2007 -24.4 0.6 -24.4 0.6 20.4 14.4 42 -16 9.7 8.4 -1 0 41 22 2.1 1.71 4.5 3.3 10.6 17.5 15 33 2006 -37.48 -37.48 17.16 23 6.33 -2 -20 2.71 3.2 11.6 -4

Comparison between the two key figures of the companies shows that Thomas Cook is performing times better than TUI Travel PLC since after they are merged with MyTravel. From the table TUI Travel PLC has earnings per share more than 400% lower than Thomas Cook Group in 4 years in a row from 2006 to 2009. We can see that after both company are merged, Thomas Cook is performing better in almost every aspect, except the price of the stock in which TUI Travel PLC is higher than Thomas Cook Group PLC in several times of the year, we can see the difference between the price in the graphs shown in the next page.

Source: http://www.redmayne.co.uk/

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This is the value of Travel and Leisure Sector in Millions of Euros, as it shows the Travel and Leisure Sector starts declining from 2007 to the lowest point in around December 2008, and this is mainly caused by the recent recess in economics in which we have just recovered from. From the two price per share graph we can see that Thomas cook suffers greatly in December 2008, although TUI Travel PLC price drops, it didnt go as low as Thomas Cooks, and this is due to TUI AG large Capital which makes the Stock still afloat when Thomas Cooks seems to be sinking in December 2008.

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3.1.2 Profit & Loss Account Compared


Profit & loss2
Year Ended 30 September millions Turnover Operating Profit Net Interest Profit Before Tax Profit After Tax Total Dividend Retained Profit / Loss 2009 9268.8 164.2 -102.1 56.1 18.3 n/a n/a

Thomas Cook Group PLC


2008 8111.5 134.7 -84.7 48.4 43.6 n/a n/a 2007 6404.5 151.8 1.1 190.2 150.7 n/a n/a 2006 7780.2 239.5 -25.4 219 179.8 n/a n/a 2009 13863 28 -89 -52 -10 n/a n/a

TUI Travel PLC


2008 13932 -196 -83 -267 -267 n/a n/a 2007 12839.9 45.6 -37.7 18.4 6.9 n/a n/a 2006 12180.3 -252.3 -25.8 -268.6 -380.8 n/a n/a

A quick comparison between the profit between both company we can see immediately that Thomas Cook is more profitable than TUI Travel PLC in 2006 to 2009, we will analyze the profit margin between these two company later in this chapter. The turnover / revenue of TUI Travel PLC is significantly higher than Thomas Cook Group PLC, but we can see that TUI Travel PLC operating Profit is not as High as Thomas Cook Group PLC. From both companies we can see that both companies are losing Revenue as well as Operating profit in 2007, in which they have just merged; TUI Travel merged with First Choice, and Thomas Cook merged with MyTravel PLC. Although in 2008 Thomas cook managed to gain back the revenue and still making a profit of 134.7 million, TUI Travel PLC loses 196 million after the merger, details of the profit and loss will be explained in the profit margin Analysis.

Source: http://www.redmayne.co.uk/

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3.1.3 Thomas Cook Group PLC and TUI Travel PLC Balance Sheet Compared Balance Sheet3
Year Ended 30 September millions Intangible Assets Tangible Assets Fixed Investments Total Fixed Assets Stocks Debtors Cash at Bank and in Hand Total Assets Creditors Amount Within 1 year Creditors Amount After 1 year Total Liabilities Net Assets Net Current Assets Called Up Share Capital Share Premium Account Other Reserves Profit and Loss Account Shareholders Funds Minority Interests 2009 3775.1 975.4 56.3 5380.9 27 n/a 550.2 7071.3 5214.1 403.4 5344.1 1727.2 n/a 57.7 8.9 2115.7 -474 1708.3 18.9

Thomas Cook Group PLC


2008 3438.1 897.1 72.1 4943.3 24.2 n/a 761.3 7021.5 5067.2 285.5 5013.1 2008.4 n/a 59.8 8.9 2192.4 -265.4 1995.7 12.7 2007 2883.5 835.3 62.3 4199.2 19.1 n/a 622.3 5817.4 2482.2 321.5 3696.8 2120.6 n/a 66.1 6.8 1995.2 44.2 2112.3 8.3 2006 1214.3 875.4 63 2508.9 10.5 n/a 736 3942.3 2025 510.9 3344.2 598.1 n/a 303.7 539.7 -22.7 -255.2 565.5 32.6 2009 4737 964 189 6309 51 n/a 790 9149 4764 624 6863 2286 n/a 112 n/a 2775 -604 2283 3

TUI Travel PLC


2008 4429 926 170 6005 51 n/a 1130 9327 8729 467 6731 2596 n/a 112 n/a 2749 -270 2591 5 2007 4216.9 1317.5 145.5 6106.8 39.7 n/a 1958.7 9649.4 3999 522.4 7018.6 2630.8 n/a 111.8 n/a 2428.7 82.9 2623.4 7.4 2006 2463.4 1522.7 92.9 4720.9 28.1 n/a 1160 8048.8 3520.7 621.5 6228.1 1820.7 n/a n/a n/a n/a n/a 1820.7 n/a

A quick summary from the 4 years Balance Sheet between TUI Travel PLC and Thomas Cook Group PLC, we can immediately asses that Thomas Cook Group PLC has less Total Assets compared to all TUI Travel PLC in 4 years. We will also analyze the Thomas Cook strategy on Light Asset Operation in details in Return on Total Asset Analysis. We will also analyze on TUI Travel PLC Fixed Investment such as new Boeing Planes the company bought to anticipate the huge Increase in demand for long haul tourism , in which the recession halt it.

Source: http://www.redmayne.co.uk/

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3.2 Profit Margin Analysis 3.2.1 Gross Profit Margin


Gross profit margin. The gross profit margin simply gives the percentage of sales available to cover general and administrative expenses and other operating costs. It is defined as follows: Gross Profit Margin = Sales Revenue - Cost of Goods Sold Sales Revenue
Gross Profit Margin Year Ended 30/09/09 23.65% m 9,268.80 m 7,076.50 THOMAS COOK GROUP PLC Year Ended Year Ended Year Ended 30/09/08 30/09/07 30/09/06 23.19% 23.64% 23.31% 4 m 8,754.20 m 6,399.85 m 5,244.245 m 6,724.30 m 4,886.756 m 4,021.857 Gross Profit Margin Pro Forma Year Ended 30/09/07 7.02% (0.702) m 12,839.90 m 11,800.40

Gross Profit Margin Revenue Cost Of Providing Tourism Services

Gross Profit Margin Revenue Cost Of Providing Tourism Services

TUI TRAVEL PLC Year Ended Year Ended 30/09/09 30/09/08 8.35% 7.33% (0.0835) (0.0733) m 13,863.00 m 13,932.00 m 12,705.00 m 12,911.00

Gross Profit Margin


0.23 0.24 0.17 0.24 0.25 0.20 0.15 0.08 0.10 0.05 Year Ended 30/09/06 Year Ended 30/09/07 Year Ended 30/09/08 TUI Year Ended 30/09/09

0.08

0.07

Thomas Cook

3.2.2 Net Profit Margin

4 5

Converted from m 9439.3 based on Exchange currency on date from Converted from m 7780.2 based on Exchange currency on date from 6 Converted from m 7207.6 based on Exchange currency on date from 7 Converted from m 5966.7 based on Exchange currency on date from

Apendix 2 Apendix 2 Apendix 2 Apendix 2

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Net profit margin. Net profit margin is the percentage of profit earned on sales. This ratio is important because businesses need to make a profit to survive in the long run. It is defined as follows: Net Profit Margin = Net Income Sales Revenue
Net Profit Margin Year Ended 30/09/09 1.77% m 164.20 m 9,268.80 THOMAS COOK GROUP PLC Year Ended Year Ended 30/09/08 30/09/07 1.22% 2.41% m 107.10 m 154.25 8 m 8,754.20 m 6,399.85
10

Net Profit Margin Net Income / Profit From operation Sales Revenue

Year Ended 30/09/06 2.82% m 147.94 9 m 5,244.24


11

Net Profit Margin TUI TRAVEL PLC Year Ended Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 30/09/06 0.27% -1.32% 1.26% 0% m 37.00 -m 184.00 m 161.90 m 0 m 13,863.00 m 13,932.00 m 12,839.90 m 0

Net Profit Margin Net Income / Profit From operation Sales Revenue

Net Profit Margin


0.04 0.03 0.03 0.02 0.01 0.01 0.02 0.00 (0.01) Year Ended 30/09/06 Year Ended 30/09/07 Year Ended 30/09/08 TUI Year Ended 30/09/09 0.02 0.01 (0.01) (0.02)

Thomas Cook

8 9

Converted from m 227.5 based on Exchange currency on date from Apendix 2 Converted from m 218.2 based on Exchange currency on date from Apendix 2 10 Converted from m 9439.3 based on Exchange currency on date from Apendix 2 11 Converted from m 7780.2 based on Exchange currency on date from Apendix 2

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3.2.3 Profit Margin Analysis


From the Chart we can see that Thomas Cook has more gross profit margin compared TUI travel PLC, in 4 years straight even though TUI travel has almost 4 times the revenue of Thomas Cook in 2006, but Thomas Cook gross profit margin is still more than 15% higher than TUI. We believe that the huge difference between TUI Travel PLC and Thomas Cook Group PLC gross profit margin is mainly on the cost of providing tourism services. The cost for providing Tourism services from both company reach almost more than 80% of their total revenue.

2007 In 2007, Thomas Cook Group PLC have just been merged with MyTravel PLC has bring the Group pro forma revenue for the year was 11,714.5 million, a decrease of 1.3 per cent on the prior year. Revenue decreased year on year in the UK (down 22.3 million), Continental Europe (down 90.4 million), North America (down 124.8 million) and Corporate (down 34.9 million). These decreases were offset by increases in Northern Europe (up 42.9 million) and Airlines Germany (up 73.4 million).12 The shortfall in gross margin, however, was more than offset by reductions in overhead costs, such that the pro forma profit from operations increased by 32.3 million year on year.13

2008 In 2008, Thomas Cook Group PLC pro forma revenue for the period was 8,809.8m, an increase of 11.8% on the prior year period. However, excluding the impact of translation and acquisitions, Group revenue was flat year on year, with an underlying decrease in UK revenue of 3% being offset by an increase in Northern Europe of 9%. The pro forma profit from operations increased by 49.8% to 365.9m.14

TUI travel PLC has had an excellent first year (in 2008) as a merged company with underlying operating profit up 53% and significantly improved profitability across the business. The integration is progressing well and TUI now targeting 175m of synergies, which is 25m higher than our previous target.

12,2 3

Taken from Thomas Cook Group Annual Report and Accounts 2007 Taken from Thomas Cook Group Annual Report 2008 4 Taken from Annual Report and TUI Accounts 2008

Page | 27

TUI travel PLC delivered a 137m improvement in underlying operating profits to 398m in 2008, our first year as a fully merged business (2007: 261m). This has primarily been achieved as a result of a strong performance in the UK driven by improved trading and the delivery of synergies, a significant turnaround in France, further improvement in Nordics from strong winter trading and improved summer trading in Germany and Austria. The Specialist Sectors also contributed to the result through a combination of organic and acquisition led growth.4

Even the underlying operating profit of TUI Travel PLC in 2008 after the merger raise up to more than 58%, the company loss m 184.00, and this is mostly due to : Restructuring expenses of 65.3m, which relate to restructuring programmes already in progress prior to the merger, the integration of acquired businesses and further restructuring activities to increase business efficiency. Merger-related integration costs of 164.3m, incurred as part of the integration programmes across the UK Mainstream and Group and Global businesses affected by the merger.

As a result of its reclassification as a disposal group held for sale earlier in the year, a goodwill impairment of 111.7m was recognised in respect of TUIfly, our airline in the German source market. TUIfly has since been declassified as a disposal group held for sale. Amortisation of business combination intangibles arising on the merger amounted to 80.0m and is included within the 2008 total charge of 86.9m.15

2009 For the year 2009, Thomas Cook Group PLC revenue for the year was 9,268.8m, an increase of 6% on the pro forma prior year. Excluding the impact of translation, Group revenue was down 1%, reflecting reduced capacity in all our major markets, as we actively managed the business through the global recession, offset by the year on year increase as a result of acquisitions in this year and last. Profit from operations before exceptional items for the year was 414.9m, an increase on the pro forma prior year of 49m, or 13%. As noted above, capacity was reduced in all major markets as we sought to manage the Group through the global recession. Trading was also adversely impacted by the swine flu outbreak, increases in fuel prices year on year, and the weakening of sterling against the euro and dollar which served to push up accommodation costs, particularly in our UK business. The adverse
15

Taken from Annual Report and TUI Accounts 2008

Page | 28

impact of the above was more than offset, however, by strong cost control, a year on year foreign currency translation benefit, the realization of additional merger synergies and contributions from acquisitions made this year and last.16 Thomas Cook Group revenue for 2009 was slightly lower than the prior year at 13,863m (2008: 13,932m). Capacity reductions reduced underlying revenue by 14%, partially offset by 4% higher selling prices, resulting in an organic revenue decline of 10%. Foreign currency translation increased revenue by 9% due to Sterling weakness and revenue from acquisitions resulted in a 1% increase over the prior year. The Group achieved a 45m improvement in underlying operating profits to 443m in 2009 (2008: 398m). This improvement has primarily been achieved by the delivery of integration synergies and the recovery of scheduled flying losses in the UK and Germany. The improvement was partially offset by the adverse impact on our French business of weaker demand and socio-political events in the French West Indies and Madagascar, and weaker demand and excess market capacity in Canada.17

There are huge difference (more than 15%)from Thomas Cook Group PLC and TUI Travel PLC gross profit margin in 4 years in a row, which we can assume that Thomas Cook is doing better than TUI since they have a rather high gross profit margin and steadily in around 20% in the last 4 years despite their revenue is by far lower than TUI Travel PLC. The graph also clearly stated that TUI Travel PLC net profit margin is lower than Thomas Cook Group PLC in the last 4 year, and we conclude that Thomas Cook is more profitable than TUI in the tourism industry.

16 17

Taken from Thomas Cook Group Annual Report 2009 Taken from Annual Report and TUI Accounts 2009

Page | 29

3.3 Return on total assets


Return on total assets. This ratio measures the profit earned on the employment of assets. It is defined as follows: Net Income Available to Return on = Common Stockholders Total Assets Total Assets
Return on total assets THOMAS COOK Year Ended Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 30/09/06 0.03 0.05 0.03 0.05 2.52% 5.09% 2.94% 4.81% m 178.10 m 7,071.30 m 357.20 m 7,021.50 m 166.15 m 5,648.89 m 127.76 m 2,657.31

Return on total assets

Net Income Total Assets

Return on total assets

Return on total assets TUI Year Ended Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 30/09/06 0.02 0.04 0.05 0.07 2.38% 3.98% 5.15% 7.17% m 218.00 m 9,149.00 m 371.00 m 9,327.20 m 497.00 m 9,649.40 m 119.30 m 1,662.80

Net Income Total Assets

Return On TotalAssets
0.07 0.05 0.05 0.03 0.05 0.04 0.03 0.02 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 -

Year Ended 30/09/06

Year Ended 30/09/07 Thomas Cook

Year Ended 30/09/08 TUI Travel PLC

Year Ended 30/09/09

Page | 30

3.3.1 RETURN ON TOTAL ASSETS ANALYSIS


From The Graph we can see that the return of total assets from both companies are unstable, unlike the revenue that raise in a stable rate over the years. We can also see that after Thomas Cook Merged with MyTravel PLC in 2007 their Return On Total Assets drops quite significantly, this is due to in September 2007, Thomas Cook Group PLC reached agreement on the terms for Condor Flugdienst GmbH, the Groups German airline, to be merged into Air Berlin plc. The merger is subject to approval by the Bundeskartellamt (Federal Cartel Office), whose primary evaluation process is due to be completed by 7 April 2008. It is intended that the merger will be completed in two stages 75.1 per cent in February 2009 and 24.9 per cent in February 2010 or earlier. Thomas Cook Group will also receive new Air Berlin shares with a value between 380 million and 475 million and a cash payment, expected to be approximately 120 million, in respect of surplus cash held in Condor. The deal is expected to be earnings-enhancing in 2008/09. Thomas Cook Group will experience an estimated reduction in net financial debt of 185 million and in pension obligations of 266 million.18 By looking at the graph we can assess that TUI Travel PLC Return on Total Asset trend is going down from 7.17% in 2006 to only 2.53% in 2009. Thomas Cook Group PLC, managed to climb up from 2.94% on 2007 to 5.09% in 2008, although the margin drops back to 2.52% in 2009. In 2007 Thomas Cook also has to close 144 shops in UK and have to rename 812 Shops which into they

Thomas

Cook,

believe to meet their optimum size.

Net assets at 31 October 2007 were 3,042.4 million (2006: 598.1 million). The business combination of Thomas Cook AG and MyTravel has been
18, 2

Taken From Thomas Cook Annual Report 2007

Page | 31

accounted for on the basis that Thomas Cook AG is the acquirer. Consequently, the MyTravel acquisition balance sheet has been the subject of a fair value exercise under IFRS 3. This fair value exercise resulted in the recognition of goodwill and purchased intangibles of 2,903.1 million, of which goodwill was 2,396.3 million, brand names, customer relationships and other intangibles were 457.3 million and order backlog was 49.5 million. Net funds at 31 October 2007 were 357.0 million (2006: 65.9 million).19

In matters of total asset, we can see that TUI Travel PLC, owns a total asset of m 9,649.40 in 2007, almost twice Thomas Cook Group PLC after the Merger with MyTravel Group PLC. Also, as we can see in the Balance sheet that TUI before the merger with First Choice in 2006, has already had m8048.8, and they only retained less than 2 million poundsterling of asset from First Choice. Unlike Thomas Cook, in which in 2006 before the merger with MyTravel Group PLC, has only m 3942.3 and after the merger Thomas Cook Group PLC total asset raise drastically to m 5817.4. Apart from that Thomas Cook announced their new Light Asset, Content Heavy Model in 2007. Thomas Cook Group PLC have a more premium margin 4, in which they have more differentiated products, not depend on ownership. They gain access to more differentiated products through strategic partnership. We can also see that Thomas Cook is more flexible in the recent economic recession, since they have a light asset, and they also have lower maintenance cost of their asset20.

TUI Travel PLC Trend Keep Declining from 2006 (before the merger) until 2009. In 2008, their return on total asset declined rapidly, are mostly because: Aircraft-related costs of 151.1m, which are primarily attributable to the loss on disposal of 19 aircraft included in the June sale and leaseback transaction.5 Further information on the separately disclosed items is included in Note 3 of the consolidated financial statements. As a result of its reclassification as a disposal group held for sale earlier in the year, a goodwill impairment of 111.7m was recognised in respect of TUIfly, our airline in the German source market. TUIfly has since been declassified as a

20,2,3 4

See appendices 2.2 Taken From TC_Final Presentation 2007 5 Taken from Annual Report and TUI Accounts 2008 6 Taken from Annual Report And TUI Accounts 2007

Page | 32

disposal group held for sale. Amortisation of business combination intangibles arising on the merger amounted to 80.0m and is included within the 2008 total charge of 86.9m.

Although Thomas Cook Group PLC maintains a Light Asset model, in 2008 Thomas Cook Group PLC has Acquired 42 companies/ plants to be used as an asset and has been added to the total asset. In the other hand, TUI Travel PLC has made 17 acquisition which cost 220.0m in total3.

Although both companies has made quite a lot of Acquisitions in 2007, TUI Travel PLC scores 5.15% in Return on total Assets compared to 2.94% of Thomas Cook Group PLC.

In 2008, TUI still on the way on finishing some acquisition in 2007, in which they still have some equity adjustments for the remaining 50% shareholding in Socit Polynsienne Promotion Hotelire, a hotel operator within the Western Europe Mainstream sector and the remaining 60% shareholding of Jet4You, a Moroccan airline. Both were previously equity accounted entities for which a share of net liabilities had not been recognised under IAS 28 and IAS 316.

In conclusion, in Return on Total Assets Margin, Thomas Cook is performing better, and more efficient than TUI Travel PLC, since the trend of TUI travel PLC continuesly declining over the years, but Thomas Cook managed to get a significant incline due to their light asset, in which cuts more cost of maintaining compared to TUI Travel PLC. Although in Overall both companies trend are declining rapidly during the year, and if this continues to occur, both companies may face bankruptcy.

Page | 33

3.4 Return on (stockholders') equity


Return on stockholders' equity. This ratio measures the percentage of profit earned on common stockholders' investment in the company. In theory, a company attempting to maximize the wealth of it stockholders should be trying to maximize this ratio. It is defined as follows: Net Income Return on = Stockholders' Equity Stockholders' Equity
Return On Shareholder Equity THOMAS COOK Year Ended 30/09/09 0.10 (10%) m 178.10 m 1,708.30 Year Ended 30/09/08 0.18 (18%) m 357.20 Year Ended 30/09/07 0.08 (8%) m 166.15 Year Ended 30/09/06 0.34 (34%) m 127.76 m 381.18

Return On Stockholder Equity

Net Income Stockholder's Equity

m 1,995.70 m 2,054.68 Return On Shareholder Equity TUI Year Ended 30/09/08 0.14 (14%) m371.00 m2,591.00 Year Ended 30/09/07 0.19 (19%) m497.00 m2,623.40

Return On Stockholder Equity

Year Ended 30/09/09 0.10 (10%) m218.00 m2,283.00

Year Ended 30/09/06 0.42 (42%) m 119.30 m 281.10

Net Income Stockholder's Equity

Return On Stockholder's Equity


0.42 0.34 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 -

0.19 0.08

0.18 0.14 0.10 0.10

Year Ended 30/09/06

Year Ended 30/09/07 TUI

Year Ended 30/09/08 Thomas Cook

Year Ended 30/09/09

Page | 34

3.4.1 Return on Stockholder Equity Analysis.


As we can see from the graphs, Both TUI Travel PLC and Thomas Cook Group PLC, RO(S)E trend is declining since the Merger. Although we can see that Thomas Cook Group PLC manage to gain a margin of 0.18 after 2007, TUI Travel PLC trend seems to keep declining, until they both meet at the same point of margin 0.10 in 2009. This trend certainly does not look good, especially Investors are looking to invest in companies that have a high ROE, which means they are high and growing.

There are quite significant changes in equity, in which we can see by the dividends paid by both company to their shareholders each year.

2006 In 2006, before the merger between the tourism division of TUI AG and First Choice Limited PLC, First Choice Limited PLC in 2006 The interim dividend in respect of the six-month period to 30 April 2006 of 2.25p per share was paid on 1 November 2006 and this dividend of 11.8m will be recognised as a deduction from equity in the year ending 31 October 2007. Subsequent to the balance sheet date, the Directors have proposed a final dividend of 5.4p per share (2005: 4.65p) payable on 10 April 2007 to the holders of relevant shares on the register at 9 March 2007. The final proposed dividend amounts to 28.3m (2005: 24.4m) and will, after approval by shareholders, be recognised in the financial statements for the year ended 31 October 2007. The final ordinary dividend of 5.4p per share, together with the interim dividend of 2.25p per share, makes a total dividend of 7.65p per share relating to the year ended 31 October 2006 (2005: 6.6p).21

21

Taken from First Choice PLC Annual Report 2006

Page | 35

With MyTravel PLC have just gone out of difficult times with loss more than Board was unable to pay a dividend. Since then, we have taken the necessary measures to facilitate the resumption of dividend payments. At an Extraordinary General Meeting on 26 May 2006, a special resolution was passed by the Companys shareholders to reduce the Companys share capital by way of a reduction in the share premium account. On 28 June 2006, this reduction of capital was confirmed by an order of the High Court. The Company is now in a position to pay dividends out of distributable profits earned from that date onwards. If the Boards expectations for 2007 are achieved, the Board would expect to be in a position in December 2007 to propose the resumption of regular payments. Included within the above balances is an amount of 66.8m (2005: 53.2m) held within escrow accounts in the United States and Canada in accordance with local regulatory requirements. Also included within the above balances is an amount of 55.4m (2005: 56.0m) of cash held by White Horse Insurance Ireland Limited, the Groups captive insurance company. These balances are considered to be restricted, however, regulatory approval is being sought for a loan of 11.6m and a dividend of 3.2m to be paid in cash from White Horse Insurance Ireland Limited to MyTravel Group plc.22.

Before the merger with Thomas Cook, My Travel PLC has was not doing well in matters of financial in the past 3 years since 2003 until 2006 before the merger23.

In 2007 First Choice Directors have approved the company has paid an interim divdend of 24.643p per share (2006:5.4p) on
Taken From Thomas Cook Annual Report 2007

February 2008 to the companys parent company, TUI Travel PLC 24 Also in2007, Thomas Cook s basic and diluted earnings per share for the year was cents 33 (2006: cents 35). To allow a more like-for-like comparison to the prior year, earnings per share before exceptional items and amortisation of business
22 23

Taken from My Travel PLC Annual Report 2006 See appendices 2.3 24 Taken from First Choice PLC Financial Statement 2006

Page | 36

combination intangibles has also been calculated. This was cents 54 for 2007 (2006: cents 25). However, it should be noted that the earnings per share figures noted here are impacted by the weighted average number of shares in issue which are significantly lower for the comparative period due to the nature of the merger transaction. As a result, management believes that the adjusted earnings per share figures included within the pro forma financial results and performance review section of this report are a better measure of return. Thomas Cook Group PLCs profit after taxation for the period ended 31 October 2007 amounted to 225.5 million. The Directors recommend a final dividend of 5p per ordinary share. No interim dividend was paid during the period.25

2008 Thomas Cook pro forma adjusted earnings per share for 2008 the period was 24.1 pence compared with 17.1 pence in the pro forma prior forma per year period. Pro

adjusted earnings share has been

calculated using the pro forma profit for the period, before exceptional items and amortisation of business
Taken From Thomas Cook Group PLC Annual Report 2008

combination intangibles, divided by the weighted average number of shares in issue. For the prior year period, the number of shares in issue at the end of the period was taken due to the distortion caused by the merger. Adjustments have been made to reflect a normalised preexceptional tax charge. The Board is recommending a final dividend of 6.5 pence per share, for payment after, and subject to shareholder approval at, the Annual General Meeting to be held on 19 March 2009.

This, together with the interim dividend of 3.25 pence paid on 5 September 2008, brings the total dividend in respect of the period to 9.75 pence. Based on the adjusted earnings per share figure noted above, this equates to a 41% payout ratio for the full year.
25

http://www.tui-group.com/fp/en/management_report/highlights_of_2007.html

Page | 37

In 2008, TUI Travel PLC interim dividend in respect of the 6month period to 31 March 2008 of 2.8p was paid on the 1 October 2008 an d this dividend of

30.9m will be recognised as a deduction from equity in the year ending 30 September 2009. Subsequent to the balance sheet date, the Directors have proposed a final dividend of 6.9p per share (2007: initial interim dividend of 5.9p per share) payable on 6 April 2009 to the holders of relevant shares on the register at 13 March 2009. The final proposed dividend amounts to 76.3m and will, after approval by shareholders, be recognized in the consolidated financial statements for the year ending 30 September 2009. The final ordinary dividend of 6.9p per share, together with the interim dividend of 2.8p per share, makes a total dividend of 9.7p per share relating to the year ended 30 September 2008. The dividend for the 9-month period ended 30 September 2007 comprises an interim dividend of 2.5p per share, which taken together with the dividend paid prior to the business combination would result in a total dividend for the year ended September 2007 of 8.4p per share. A dividend

reinvestment plan is in operation. Those shareholders who have not elected to participate in this plan, and who would like to participate with respect to the 2008 final dividend, may do so by contacting Equiniti direct on 0871 384 2030. The last day for election for the final proposed dividend is 23 March 2009 and any requests should be made in good time ahead of that date.26

2009

26

Taken From TUI Travel PLC Annual Report and Accounts 2008

Page | 38

In 2009, TUI travel PLC interim dividend in respect of the year ended 30 September 2009 of 3.0p per share was paid on 1 October 2009 and this dividend of 33m will be recognized as a deduction from equity in the year ending 30 September 2010. Subsequent to the balance sheet date, the Directors have proposed a final dividend of 7.7p per share (2008: final dividend of 6.9p per share) payable on 1 April 2010 to the holders of relevant shares on the register at 12 March 2010. The final proposed dividend amounts to 85m and will, after approval by shareholders, be recognized in the consolidated financial statements for the year ending 30 September 2010. The final ordinary dividend of 7.7p per share, together with the interim dividend of 3.0p per share, makes a total dividend of 10.7p per share relating to the year ended 30 September 2009.27

In 2009, Thomas Cook board is recommending a final

dividend of 7.0 pence per share, which when combined with the interim dividend of 3.75 pence per share paid on 4 September 2009, makes atotal dividend for the year of 10.75 pence per share. This recommendation reflects the Groups financial achievement, the strength of our financial model and our commitment to delivering value to shareholders. The total dividend for the year represents a payout of 41% of adjusted diluted earnings per share and is in line with our policy, which remains to increase dividends progressively, paying between 40% and 50% of adjusted earnings by way of dividend. Once approved, the final dividend will be payable on 8 April 2010 to holders of relevant shares registered on 19 March 2010. The basic earnings per share before exceptional items (adjusted earnings per share) for the year was 26.4p, an increase of 10% on the 2008 pro forma figure. The adjusted diluted earnings per share for the year was 26.2p (2008 pro forma: 24.1p). The basic and diluted statutory earnings per share was 1.9p and 1.8p respectively (2008 statutory: basic and diluted of 4.6p). The Board is recommending a final dividend of 7.0p per share, for payment after,
27

Taken From TUI Travel PLC Annual Report and Accounts 2009

Page | 39

and subject to shareholder approval at, the Annual General Meeting to be held on 25 March 2010. This, together with the interim dividend of 3.75p per share, brings the total dividend in respect of the financial year to 10.75p. Based on the adjusted diluted earnings per share figure noted above, this equates to a 41.0% payout ratio for the full year compared with a payout ratio of 40.5% in the prior year.28 Thomas Cook performs better in return on stockholders equity, which means Thomas Cook are really well on reinvesting earnings to generate additional earnings. We can conclude that Thomas Cook Group is more efficient even only slightly than TUI Travel. Thomas Cook is more attractive to investor than TUI, since Thomas Cook ROE is higher.

28

Taken From Thomas Cook Annual Report 2009

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3.5 Liquidity Ratios

3.5.1 Current ratio


Current ratio. The current ratio measures the extent to which the claims of short-term creditors are covered by assets that can be quickly converted into cash. Most companies should have a ratio of at least 1, because failure to meet these commitments can lead to bankruptcy. The ratio is defined as follows: Current Ratio = Current Assets Current Liabilities
Current Ratio THOMAS COOK Year Ended Year Ended 30/09/08 30/09/07 0.55 0.62 m 2,078.20 m 1,561.57 m 3,749.80 m 2,534.30 Current Ratio TUI Year Ended Year Ended 30/09/08 30/09/07 0.71 0.85 m 3,322.20 m 3,542.60 m 4,682.30 m 4,151.00 Pro Forma Year Ended 30/09/06 0.67 m 934.37 m 1,400.54
First Choice PLC

Current Ratio Current Assets Current Liabilities

Year Ended 30/09/09 0.40 m 1,681.30 m 4,166.30

Current Ratio Current Assets Current Liabilities

Year Ended 30/09/09 0.56 m 2,840.00 m 5,091.00

Year Ended 30/09/06 0.58 m 572.00 m 979.30

Current Ratio
1.00 0.85 0.66 0.58

0.80 0.71
0.55 0.56 0.40 0.60 0.40 0.20 -

0.62

Year Ended 30/09/06

Year Ended 30/09/07

Year Ended 30/09/08 TUI

Year Ended 30/09/09

Thomas Cook

Page | 41

3.5.2 Current Ratio Analysis


The current ratio of both Thomas Cook Group PLC, and TUI Travel PLC shows that both of these two company is not a very liquid company, especially for a one year period. The graph clearly shows that these two companies current ratio are below one, and their current liability for the year is far greater than their current assets, which means these two companies are not so good in their short term financial standing.29 Between Thomas Cook Group PLC, and TUI travel PLC current ratio, TUI ratio is higher than Thomas Cooks, which after the merger between TUI tourism division and First Choice, which in 2007 the balance sheet between TUI Tourism Division and First Choice has to be combined, and also the debt of the consolidated balance sheet of TUI has to be added with the debt of First Choice Group PLC. There were 694 million funds raised from convertible bonds, with a further 150 million raised through private placements, the objective of the funds it to safeguard the framework liquidity of general corporate financing. With TUI Tourism Division merged with First Choice PLC, financial risk management system, also cash management that was managed by TUI AG has to be splitted. TUI Travel PLC now performs these functions for the tourism division in line with the unchanged risk policy of the Group, while TUI AG continues to hold this function for all other business activities of the Group.30 2007 TUI Travel PLC Current Asset in 2007 was lower than the previous year before the merger, this is because there are a significant decrease in current asset, especially in cash and cash equivalents31, there has been a major decrease from 298.9 million (2006) to only 11.9 million (2007). 32 Other than that, other items in the 2007 current asset are increasing, a notable increase from 2007 is in the trade and other receivables and also assets classified as held for sale which raise significantly from 88.0 million to 156.8 million. This amount is 80% accounted from sale of aircraft from Jet4You, and also Budget Travel Limited 5. Total current liabilities of TUI Travel PLC also increased approximately 500 million from 2006 to 2007 which mainly from trade and other payables. The increase was highly on
29 30

Current Ratio Definition: http://www.investorwords.com/1258/current_ratio.html


http://www.tui-group.com/fp/en/management_report/highlights_of_2007.html

31,4,5,6 7

See appendices 2.3 Thomas Cook Annual Report 2007

Page | 42

creditors, which raise from only 79.8 million to 233.3 million in 2007, and TUI travel PLC receives 240 million more from clients which received in advance 6. Thomas Cook in the other hand, has a huge increase of current asset in 2007 after the merger, this is mainly due to Current asset securities of 366.7 million (2006: 72.7 million) include 292.3 million (2006: nil) in relation to a managed investment fund established to optimize the utilization of the Groups surplus liquidity. The fund is classified as held-for-trading investments and includes corporate and government bonds (239.4 million), quoted (10.2 million) and unquoted (37.6 million) securities and other assets (5.1 million). Securities also include money market deposits with a maturity of greater than three months of 74.4 million (2006: 72.7 million) which are also classified as held-for-trading investments.7

The average credit period taken on invoicing of leisure travel services is nine days (2006: seven days). No interest is charged on the receivables. The credit risk in respect of direct receivables from customers is limited as payment is required in full before the services are provided. In the case of travel services sold by third-party agents, the credit risk depends on the creditworthiness of those third parties, but this risk is also limited because of the relatively short period of credit.

Deposits

and

prepayments

include

amounts paid in advance to suppliers of hotel and other services in order to guarantee the provision of those supplies and historically have covered periods from one to 36 months in advance. The Groups current policy is that deposits and prepayments will normally only be made for periods of up to 12 months in advance. There is a credit risk in respect of the continued operation of those suppliers during those periods. Deposits and prepayments also include 78.4 million (2006: 40.1 million) of deposits on aircraft lease arrangements which are primarily attributable to the UK Airline.

Page | 43

Securities include money market securities amounting to 5.5 million (2006: 5.2 million) purchased as collateral against liabilities arising from part-time retirement contracts at Thomas Cook AG. Current asset securities of 366.7 million (2006: 72.7 million) include 292.3 million (2006: nil) in relation to a managed investment fund established to optimise the utilisation of the Groups surplus liquidity. The fund is classifi ed as held-for-trading investments and includes corporate and government bonds (239.4 million), quoted (10.2 million) and unquoted (37.6 million) securities and other assets (5.1 million). Securities also include money market deposits with a maturity of greater than three months of 74.4 million (2006: 72.7 million) which are also classified as held-for-trading investments. Loans include advances of 2.6 million (2006: 2.6 million) to two hotel companies in which the Group has a participating interest. These loans are interest bearing at rates based on Euribor and are unsecured. The amounts presented in the balance sheet are net of allowances for doubtful receivables of 73.2 million (2006: 54.1 million). An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.33.

Thomas Cook did not have any current assets for sale in 2007, in which TUI Travel PLC has to sell quite a lot of asset.34

2008 In 2008, Thomas Cook current ratio dropped from 0.62 to 0.55, this is due to a slight raise of the current liabilities of 1200 million, and only 500 million on asset. More than 200 million on current asset derived from Trade and Other receivable, and around 163 million in financial derivative35 Although the changes in the liabilities is 90% affected by the raise of the foreign exchange, which causes interest rate swaps raise drastically form 69.1 million to 523.5 million, which is almost 10 times from 20074.

The average credit period taken on invoicing of leisure travel services is eleven days (2007: nine days). No interest is charged on the receivables. The credit risk in respect of direct
33

34,3,4

Taken From Thomas Cook Annual Report and Accounts 2007, see appendices 2.3 see appendices 2.3

Page | 44

receivables from customers is limited as payment is required in full before the services are provided. In the case of travel services sold by third party agents, the credit risk depends on the credit-worthiness of those third parties, but this risk is also limited because of the relatively short period of credit.

Deposits and prepayments include amounts paid in advance to suppliers of hotel and other services in order to guarantee the provision of those supplies and historically have covered periods from 1 to 24 months in advance. The Groups current policy is that deposits and prepayments will normally only be made forperiods of up to twelve months in advance. There is a credit risk in respect of the continued operation of those suppliers during those periods. Deposits and prepayments also include 63.3m (2007: 54.7m) of deposits on aircraft lease arrangements which are primarily

attributable to the UK Airline.

Securities include money market securities amounting to 3.7m (2007: 3.8m) purchased as collateral against liabilities arising from parttime retirement contracts at Thomas Cook AG, which are classified as available-for-sale

financial assets. Current asset securities of 129.2m (2007: 255.6m) include 129.2m (2007: 203.8m) in relation to a managed investment fund established to optimise the utilisation of the Groups surplus liquidity. The fund is classified as held-for-trading investments and includes corporate and government bonds of 129.2m (2007: 166.9m). In the prior year there was also 7.1m quoted securities, 26.2m unquoted securities and 3.6m other assets. Securities in the prior year also included money market deposits with a maturity of greater than three months of 51.8m, classified as held-for-trading investments.

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Loans include advances of 2.1m (2007: 1.8m) to two hotel companies in which the Group has a participating interest. These loans are interest bearing at rates based on Euribor and are unsecured.36

2009 For the year 2009 we can see that both TUI Travel PLC and Thomas Cook Group PLC, current ratio is declining. TUI Travel PLC Ratio in 2009 is 0.56 declined from 0.71 and also Thomas Cook Group PLC declined from 0.55 to 0.40. Both TUI and Thomas Cook current asset is declining, but both of their liabilities are raising. This makes the current ratio declined drastically. Thomas Cooks current asset in 2009 were lower than 2008, in which this was caused by a decrease in cash and cash equivalent, which largely comprise bank balances denominated in sterling, euro and other currencies for the purpose of settling current liabilities as well as balances arising from agency collection on behalf of the Groups travel agencies.

Included within the above balances is an amount of 46.2m (2008: 56.4m) held within escrow accounts in the United States and Canada in respect of local regulatory requirements. Also included within the above balances is an amount of 13.6m (2008: 55.0m) of cash held by White Horse Insurance Ireland Limited, the Groups captive insurance company, and 0.4m (2008: 15.7m) held in other securities. These balances are considered to be restricted37.

Another decrease in trade and other receivables in 2009 which constitute of 90 million, mostly from securities, which in 2007 was 129.2 million and in 2009 is none, and a decrease of 50 million in other receivables.

The average credit period taken on invoicing of leisure travel services is 14 days (2008: 11 days). No interest is charged on the receivables. The credit risk in respect of direct receivables from customers is limited as payment is required in full before the services are provided. In the case of travel services sold by third-party agents, the credit risk depends on the credit worthiness of those third parties, but this risk is also limited because of the

36 37

Taken from Thomas Cook Annual Report and Accounts 2008, see appendices 2.3 Taken from Thomas Cook Annual Report and Accounts 2009, see appendices 2.3

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relatively short period of credit.

Deposits and prepayments include amounts paid in advance to suppliers of hotel and other services in order to guarantee the provision of those supplies and historically have covered periods from 1 to 24 months in advance. The Groups current policy is that deposits and prepayments will normally only be made for periods of up to twelve months in advance. There is a credit risk in respect of the continued operation of those suppliers during those periods. Deposits and prepayments also include 65.0m (2008: 63.3m) of deposits on aircraft lease arrangements which are primarily attributable to the UK Airline.

Securities include money market securities amounting to 4.0m (2008: 3.7m) purchased as collateral against liabilities arising from part-time retirement contracts at Thomas Cook AG, which are classified as available for sale financial assets.

In the prior period, current asset securities of 129.2m consisted of a managed investment fund established to optimise the utilisation of the Groups surplus liquidity. The fund was classified as held-for-trading investments and consisted of corporate and government bonds. These securities were disposed of during the current year. In the prior period, loans included advances of 2.1m to two hotel companies in which the Group had a anticipating interest. These loans were interest bearing at rates based on Euribor and were unsecured. The advances were settled in full during the year.38 In May 2008, the Group entered into a 1.8bn committed credit facility maturing in May 2011. The facility comprises term loan, revolving credit and bonding facilities. 320m of the revolving credit facilities were originally made available for the Group in respect of the proposed transaction between Condor and Air Berlin. During the year, the Group entered into an agreement with its lenders to change the designation of this portion of the facility to enable it to be used to meet the aircraft refinancing needs of the Group. This re-designation became effective on 1 October 2009 and the facilities were fully available to the Group from this date.

Amounts are repayable under the term loan facility at fixed intervals with a final bullet payment at maturity. As at 30 September 2009, the Group had repaid a total of 75m of term loans.
38

Taken from Thomas Cook Annual Report and Accounts 2009, see appendices 2.3

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The Directors consider that the fair value of the Groups borrowings with a carrying value of 940.0m is 943.9m (2008: carrying value 772.1m; fair value 770.0m). The fair values quoted were determined on the basis of the interest rates for the corresponding terms to maturity or repayment as at the period end. For items maturing in less than one year, the Directors feel that the fair value is equal to the carrying amount39.

For TUI Travel PLC, in 2009 the current asset drops 500 million but the current liabilities raise for more than 500 million. The drop in the current asset can be explained by a decrease of 120 million in trade and other receivables, a decrease of 380 in cash and cash equivalent. Cash and cash equivalents includes 60m (2008: 46m) that is not available for immediate use by the Group. This is made up of monies held to meet regulatory requirements plus cash balances on short term deposits held on a restricted basis by the Groups captive insurance funds as part of their ongoing operations. Other current investments disclosed on the consolidated balance sheet comprise deposit balances held to meet regulatory requirements with a term exceeding three months40.

TUI Travel PLC decrease in current liabilities is also because a significant decrease in asset held for sale which in 2008 was more than 135 million to only 67 million, The disposal group assets and liabilities held for sale comprise the Canadian Mainstream business at 30 September 2009 and Socit dInvestissement Arien S.A. (Jet4You) at 30 September 2009 and 30 September 2008. Jet4You is included within the Western Europe segment and the Canadian Mainstream Business is included in the Northern Region. Mainstream The Canadian is

business

classified as held for sale on the basis of the announced joint venture transaction with

Sunwing Travel Group Inc. Jet4You is presented as held for sale at the current and or

39

40,2,3

Taken from Thomas Cook Annual Report and Accounts 2009, see appendices 2.3 Taken from TUI Travel PLC annual Report 2009, see appendices 2.3

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year end, based on the active disposal process for the business which is progressing and which the Directors expect to complete within 12 months.

Aircraft held for sale relate to the Northern Europe and Central Europe Mainstream segments. In the year ended 30 September 2009, an impairment charge of 1m (2008: 31m) has been taken to record these property, plant and equipment assets at the lower of their carrying value and fair value less costs to sell. The impairment charge is included within separately disclosed restructuring expenses and aircraft items (Note 3).

During the prior year, four aircraft were purchased but were not sold and leased back until the first quarter of the current year ended 30 September 2009. The four aircraft were therefore classified as held for sale at 30 September 2008 until their disposal for a total of 90min the current year. The disposal proceeds are included within Proceeds from sale of property, plant and equipment on the consolidated cash flow statement 2.

Beside of that, there is a huge increase in borrowings in 2009 in TUI Travel PLC is from 99 million to 327 million, which they have to increased their shareholding from 51% to 70% on the exercise of part of one of the options. The remainder of this put option over 20% of the shares may be exercised at any time until 2015. A further put option at a fixed price with no time limit has been written by the Group during the year to the same minority shareholder for the remaining 10% shareholding3.

In conclusion, both companies in 2009 are trying to cover the expenses they have made from the years before by borrowing from banks, and from shareholders. Especially TUI Travel have to cover the losses and pay the shareholders. We can see that in this case (current ratio) TUI performs better than Thomas Cook Group PLC since Thomas Cook seems to be cutting down on cash at hand, which make Thomas Cooks current asset decline drastically. Although both companies have borrowings, Thomas Cooks loans is twice as much from TUI Travel PLC for 4 years.

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3.6 Leverage Ratios 3.6.1 Debt-to-assets ratio41


Debt-to-assets ratio. The debt-to-asset ratio is the most direct measure of the extent to which borrowed funds have been used to finance a company's investments. It is defined as follows: Debt-to-Assets Ratio = Total Debt Total Assets

Debts-to-assets ratio Total Debt Total Assets

Debts-to-assets ratio Total Debt Total Assets

Debts-to-assets ratio THOMAS COOK Year Ended Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 30/09/06 18.46% 17.68% 11.29% 12.78% 3,396.00 3,480.00 1,737.00 1,518.00 6,639,500.00 6,689,800.00 5,500,386.00 4,997,333.00 Debts-to-assets ratio TUI Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 12.62% 13.88% 23.16% 3,903.00 m 6,845.00 m 6,410.00 k 9,481,600.00 k9,122,000.00 k 8,938,000.00

Debts to Asset - Ratio


23.16% 17.68% 12.78% 13.88% 11.29% 25.00%

18.46%
12.62%

20.00% 15.00% 10.00% 5.00%

Year Ended 30/09/06 Year Ended 30/09/07 TUI Year Ended 30/09/08 Thomas Cook Year Ended 30/09/09

0.00%

41

Data from http://www.selftrade.co.uk/company-tui-travel---1uTT..L , http://www.selftrade.co.uk/quotethomas-cook---1uTCG.L#

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3.6.2 Debt to Asset Ratio analysis


The debt to ratio sows the proportion of a companys assets which are financed through debt. If the ratio less than one, most of the companys assets are financed through equity. If the ratio is greater than one most of the company's assets are financed through debt. Companies with high debt/asset ratios are said to be "highly leveraged," and could be in danger if creditors start to demand repayment of debt. The debt to asset ratio for Thomas Cook and for TUI Travel PLC for the last 4 years, is rapidly changing. We can see that Thomas Cook Group PLC in 2006 to t2007debt to asset ratio was declining slightly, but in 2008 the ratio drastically increase to 17.68% from 11.29% and continuously grew to 18.46% in 2009. Unlike Thomas Cook Group PLC, TUI Travel PLC Debt to asset ratio declined for 10% from 23.16% in 2007 to merely 13.88% in 2008, and steadily declining to 12.62% in 2009, a significant change, in which the ratio were mostly affected by the loans that TUI Travel PLC made, and paid, the major changes has been explained in details in return on total asset analysis. The major changes that happens in terms of total assets has been explained in return on total asset analysis for Thomas Cook Group PLC. In brief, both Thomas Cook and TUI Travel PLC investments on assets are financed through debts, since the margin are quite high, we can say that Thomas Cook and TUI Travel PLC are highly leveraged since most of the companys assets are financed through debts 42.Although both companies are highly in debt, TUI Travel PLC still better than Thomas Cook in this matter, since TUI has less debt than Thomas Cook. These companies will be in danger if their creditors start to demand a repayment of debt.

42

http://www.investorwords.com/5497/debt_asset_ratio.html

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3. 6.3 Debt-to-equity ratio43


Debt-to-equity ratio. The debt-to-equity ratio indicates the balance between debt and equity in a company's capital structure. This is perhaps the most widely used measure of a company's leverage. It is defined as follows: Debt-to-Equity Ratio = Total Debt Total Equity

Debts-to-equity ratio Total Debt / Net Debt Total Equity

Debts-to-equity ratio Total Debt / Net Debt Total Equity

Debts-to-equity ratio THOMAS COOK Year Ended Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 30/09/06 0.72 0.60 0.29 0.72 71.74% 59.25% 29.47% 71.74% m 3,396.00 m 3,480.00 m 1,737.00 m 3,396.00 m 1,727.20 m 2,008.40 m 2,062.75 m1,727.20 Debts-to-equity ratio TUI Year Ended Year Ended Year Ended 30/09/09 30/09/08 30/09/07 0.49 0.48 0.83 49.41% 48.88% 83.71% m 6,903.00 m 6,845.00 m 6,410.00 m 2,283,000.00 m 2,591,000.00 m 2,623,500.00

Debts to Equity - Ratio


1.40

1.20
1.00 0.84 0.59 0.49 0.36 Year Ended 31/10/06 Year Ended 31/10/07 Year Ended 30/09/08 TUI Year Ended 30/09/09 0.29 0.72 0.49 0.80 0.60 0.40 0.20 0.00

Thomas Cook

43

Data from http://www.selftrade.co.uk/company-tui-travel---1uTT..L , http://www.selftrade.co.uk/quotethomas-cook---1uTCG.L#

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3.6.4 Debts to Equity Ratio Analysis


Debt to equity measures a companys financial leverage. Debt/equity ratio is equal to longterm debt divided by common shareholders' equity. Typically the data from the prior fiscal year is used in the calculation. Investing in a company with a higher debt/equity ratio may be riskier, especially in times of rising interest rates, due to the additional interest that has to be paid out for the debt44. From the graph we can see that after the merger (2007) TUI Travel PLC financed their investment through debt, and Thomas Cook Group PLC uses more equity than debt to finance their investment. In 2008, TUI reduces their debt until almost half (0.49 from 0.84) but Thomas Cook debt has raised from 0.29 to 0.59 in 2008. This significant changes in the debt is to complete some acquisition in the year, which we have explained in Return on Stockholder Equity analysis. In 2009, TUI Travel PLC managed to keep their margin to be stable, in which Thomas Cook has earned more debt in the following year Thomas Cook raise on debt to equity margin is mainly because of their total equity value drops, and there has been a significant decrease in the cash at hand in their current ratio, which has been explained in detail in the return on total asset analysis. In brief, TUI Travel PLC performs better in debts to equity ratio, which TUI did not use as much debt as TUI to invest on their assets. TUI Travel PLC uses their shareholder equity more to invest on the assets they have, since TUI Travel PLC main objective is to retain assets, and Thomas Cooks goal was to reach as high as possible on gross profit margin, but in return, they have to pay debts and borrowings which will need to be paid in 1 to 10 years time.

44

http://www.investorwords.com/1316/debt_equity_ratio.html

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3.7 Financial Analysis Summary

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TUI TRAVEL PLC

THOMAS COOK GROUP PLC

Page | 55

TUI TRAVEL PLC

THOMAS COOK GROUP PLC

Taken From : http://www.selftrade.co.uk/quote-thomas-cook---1uTCG.L#

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3.7.1 Financial Analysis Conclusion


From the financial point of view, our group has made a conclusion that Thomas Cook Group PLC performs better than TUI Travel PLC in some very essential part. Thomas Cook scores better in profit margin, both gross profit margin and net profit margin, which makes Thomas Cook is more profitable than TUI Travel PLC. We can also see that the profit that Thomas Cook made is much more than TUI Travel. TUI Travel had not been very profitable since the last 4 years, in fact they are losing money each year and more every year since they merged with First Choice. Thomas Cook also performs slightly better than TUI Travel in terms of return on total assets, in which TUI Travel return on total assets margin are declining steadily from 2007 to 2009. Thomas Cook also performs better in return on stockholders equity in which Thomas Cook are really well on reinvesting earnings to generate additional earnings. We can conclude that Thomas Cook Group is more efficient even only slightly than TUI Travel. Thomas Cook is more attractive to investor than TUI, since Thomas Cook ROE is higher. Although TUI Travel PLC is not profitable compared to Thomas Cook, and also the return on Equity is lower, TUI Travel have a higher current asset ratio compared to Thomas Cook. Thomas Cook also had quite a lot of debt, mainly long term, but Since this margin is ignoring TUI Travel liabilities. And it also means that TUI Travel is more liquid than Thomas Cook Group PLC, and is more efficient on meeting short term debt obligations, and TUI Travel is relatively better in short term financial standing. Although both companies are highly in debt, TUI Travel PLC still better than Thomas Cook in this matter, since TUI has less debt than Thomas Cook. These companies will be in danger if their creditors start to demand a repayment of debt. TUI Travel PLC performs better in debts to equity ratio, which TUI did not use as much debt as TUI to invest on their assets. TUI Travel PLC uses their shareholder equity more to invest on the assets they have, since TUI Travel PLC main objective is to retain assets, and Thomas Cooks goal was to reach as high as possible on gross profit margin, but in return, they have to pay debts and borrowings which will need to be paid in 1 to 10 years time.

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Chapter 4: Marketing
4.1. Mission statement:

A Mission Statement of the organizations purpose what it wants to accomplish in the larger environment45. A mission statement also should be the guideline of the companys marketing orientation. In matter of Mission Statement, TUI Travel PLC and Thomas Cook Group PLC have different perspectives. Under the global vision WE GO FURTHER TO MAKE DREAMS COME TRUE, Thomas Cook states itself with four different missions based on five main divisions: UK & Ireland, Continental Europe and Airlines Germany, Northern Europe, North America. The differences in the Thomas Cook s Mission Statements in different divisions are related on its flexible business models and concentrated marketing strategy for every different geography market.

UK & Ireland Continental Europe and Airlines Germany Northern Europe North America

Exceptional Service From Exceptional People

To perfect the personal leisure experience.

Further we go to make dreams come true


To be the best travel company in the world to travel with, work for, and invest in

Conversely, TUI travel plc does not public any mission statement. Being confident about the reputations as one of the market leaders in Tourism industry, the Leader of TUI believed it is not essential to have a sentence to describe company's function, markets and competitive advantages; and state its business goals and philosophies, which have already become the famous concepts. TUI Travel PLC does not have a Mission Statement. We have a stated strategy which is to create superior shareholder value by being the worlds leading leisure travel group providing customers with a wide choice of differentiated and flexible travel experiences to meet their changing needs To enable us to achieve this goal we have identified four key strategic imperatives which are linked to our KPIs.46 In our group opinion, a mission statement is the fundamental guideline of the company. A mission statement defines what an organization is, why it exists, its reason for being. At a minimum, a mission statement should define who primary customers are, identify the products and services the company produce, and describe the geographical location in which company operate. Specializing mission statement for each business divisors,
45 46

TUI Travel Annual Report 2009 FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs

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Thomas Cook creates itself more advantages in communication with not only customers, investors but also the companys employees. All of these elements are extremely critical in strengthen the firms position in the core markets, and expand and develop business in the new markets.
4.2. SWOT Analysis:

TUI Travel plc Strengths


Market leader tourism industry. in the

Thomas Cook
Scale (22m passengers out of 21 source markets). Portfolio of strong brands

Be a part of TUI AG, an international cooperation, which is operating business in Travel, Hotels and Resorts, Cruises, and major share holder in Container shipping (43.33% holding in Hapag-Lloyd). Unique media methods in marketing (TUI song: Lets make people smile). Strong multi-channels distribution focusing on online sales. Delivering high customers services. quality

Speed of decision making and implementation Industry leading margins

Tailored business model in each market Strong multi-channel distribution capability Asset light model improving

Strong and financial position

Stable and managementfriendly shareholders.

Positive customer feedback: 97% customer satisfaction; 96% would recommend TCNE. Unique concept hotels.

No1 market share of Canaries, Majorca, Turkey, Egypt and Rhodes. 25years average industry experience. Strong partnerships.

Weakness

Company registered a net loss of EUR 142 million in 2008 (Annual Report 2008) Major reduction in the

Has no customer retention policy. Has little or outside of Europe. no scope

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volume of holiday packages because of recession and financial uncertainties Heavy Fixed Assets lead to the lack of flexibility and reduce the competition ability when the economic climate has high level of uncertainty. (Fixed assets cover 34% of total assets) Maintaining too many different brand names makes the companys marketing and management expenses become too high.

Lack of service, flexibility and business focus (such as frequent flyer programmes) make the low-cost model unappealing for most business travelers. The two drivers of growth, the focus on price and the focus on convenience (frequent flights, few connections, more nearby airports) are reaching their natural limits. Differentiation from there remains to be difficult. Easy Jets own success makes it difficult to recruit and train staff quickly enough

Opportunities

Expansion in developing markets such as India and China. Business expansion through further acquisition and mergers. Recovery signs of the world economic after economic recession.

Experts predict great potential for future growth in the next years. The current recession is favorable as people and businesses are more costconscious. More full-service airlines may withdraw from the regional market to focus on more profitable long-haul routes leaving the market to the lowcost operators.

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Threats

Changing consumer behavior in his global economic recession can influence companys strategy. Threat of losing consumers who want a low-cost packagers because companys focus on luxury hotels. Competitors, such as Thomas Cook, are more flexible in business models and strategies.

Competition is likely to intensify, given the saturated market and the shortage of other options. Increased competition is likely to lead to greater difficulties in demanding incentives from communities. Companies cut on business travel in times of economic downturn and because of new time-consuming security measures travel substitutes like videoconferencing are introduced.

4.3. Strategic Objectives:

The companys statement needs to be turned into the Strategic Objectives, which include business objective and marketing objective to guide management. Based on the company global vision, both Thomas Cook and TUI set up the clear clear strategic goals. Thomas Cooks strategic goals are built around our vision of going further to make dreams come true. The strategic objective: STRENGTHENING OUR BUSINESS AND INVESTING FOR GROWTH is developed in four growth drivers: Maximize value of
mainstream, Become leading independent travel provider, Become the leading UK travel-related financial services provider, and Capture growth and value through mergers & acquisitions and partnerships.

Maximize value of mainstream: Product mix Leverage brands Multi-channel distribution Capacity reduction Reduced costs via flexibility Maximize consolidation benefits Further consolidation Leading independent travel Page | 61

provider: Substantial business today One-stop-shop proposition E-commerce led via website, but multi-channel Wholesale and retail distribution Emerging markets growth

Leading UK travel-related financial services provider: Network expansion UK TC brand FX, Insurance & Credit Card Cross selling High street led, but multi-channel FX price proposition Insurance regulatory environment M&A opportunities in the following areas: Developing markets Consolidation in mature markets Capture further value in profitable products Independent travel Financial Services

TUI travel plc builds up itself a more specific strategic goal, which is emphasized on the values of the shareholders and customers. Creating superior shareholder value by being the worlds leading leisure travel group providing customers with the widest choice of differentiated and flexible travel experiences to meet their changing needs. TUIs strategy is focused on four areas Product & Content, Distribution & Brands, People & Operational, Effectiveness and Growth & Capital Allocation

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Imperative 1: Product & Content Different products to our competitors and unique in the marketplace: developing a portfolio of exclusive products that no competitor can match or replicate and which is tailored to include additional services and facilities that customers want on their holiday. High customer retention and repeat booking rates. Earlier booking trends: increases yields and removes pressure in the late market, while customers also benefit from a more added-value, unique experience.

Imperative 2: Distribution & Brands Highly trusted brands that provide value and quality: highly trusted brands provide excellent value for money and drive customer loyalty and repeat bookings. Broadening customer choice: provide customers with a wide choice of holiday options that meet their preferences, and a convenient range of booking options, Building our customer relationships: the distribution of products, in each source market, is tailored to reflect different customer preferences and market dynamics. Each source market has its own distribution strategy, which aims to reduce costs by building controlled distribution through the efficient operation of retail shops, the use of the internet as a research and booking tool and by the utilisation of call centres. Imperative 3: People & Operational Effectiveness People are key to success. Flexible business model that can react to demand changes. Development of sophisticated capacity and yield management systems. Underlying operating profit margin up 30 basis points from 2.9% to 3.2%. Integration progressing well with total synergies upgraded to 200m. Imperative 4: Growth & Capital Allocation Acquired 11 niche high-growth businesses in Specialist Sectors. Growth plans are progressing well in Russia & CIS. Consolidation of the Canadian market through a proposed strategic venture with Sunwing. Underlying operating profit up 11% to 443m. Increase in return on invested capital to 9.2%. In matter of Strategic Objectives, we think that TUI have better customer oriented image. Due to the fact, TUI considers the customers values and relationships as the critical element. It means the company concerns more about market place understandings and customers needs; design value creating marketing strategies, deliver customer satisfaction, and build strong customer relationship. In return, TUI can improve its sale

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profit and earn customer loyalty. TUI creates value for customers and shareholders in order to capture value form customers in return 47.

4.4. Market position:

TUI and Thomas Cook operate in the five five geographic segments UK & Ireland, Continental Europe and Airlines Germany, Northern Europe, North America, and Emerging Markets ( Eastern Europe, Japan,China and India). They both are the market leaders in these markets. TUI is doing business in a larger market, which includes 27 Source Markets48: Australia Austria Belgium Canada China Czech Republic Denmark Finland France Germany Hungary Italy India Ireland Luxembourg Netherlands Norway New Zeleand Poland Russia Slovenia Spain Sweden Switzerland United Kingdom United States Ukraine

Compare with the number of Thomas Cook operating markets is 21 countries 49

Market dynamics: While the outlook remains challenging there are signs of recovery in consumer confidence. However, the weakness of sterling versus the euro and US dollar is expected to increase input costs and to continue to affect consumer sentiment. Before the mergers in 2007, TUI Thomson and First Choice) and Thomas Cook had already been the leading players of UK travel leisure market, who held the biggest market shares.

47 48 49

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TUI Travel plc


Passengers50 5.687m

Thomas Cook
7.6m (Including UK, Ireland, Middle East, and India)

Controlled distribution51 Market position

2009 78%

2008 75%

2009 68.6%

2008 67.4%

Mainsteam sector: #1 (34% market Mainsteam sector: #2 share)52 Financial services (Foreign Exchange market): #4 (7% market share) Financial services (Foreign Exchange market): #3 (15% market share) Target further mainstream margin improvement through product and haul mix. Develop our e-commerce strategy and move into the online travel agency market.

Strategy

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to

50 51 52

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align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management. Key Brands

Continue to grow travelrelated financial services, notably foreign exchange. Build on our strong performance in key medium haul destinations outside the Eurozone.

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Market dynamic: Following tough trading conditions in the 2009 financial year, GDP forecasts for 2010 are ahead of previous expectations helping to improve consumer sentiment.

TUI Travel plc


Passengers53 9.73m (Including Germany) Controlled 2009 distribution54 46% Strategy

Thomas Cook
2008 40% 7m 2009 38.3% 2008 37.7%

Expanding the tour operator business in growth markets like Russia and Ukraine. Expanding the market share in the German-speaking volume market for cruises. Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Increase sales of exclusive and differentiated product to maintain margin advantage. Continue to grow online distribution channels and improve dynamic packaging capabilities. Increase sales to medium haul destinations such as Turkey and North Africa.

Key Brands

53 54

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Market Dynamic: The UNWTO expects oral customer spending to decline by 4-6%. 3 major players; consolidated market Limited dependency on third party travel agents High online penetration Most local LCCs regional only or loss making Kuoni buying smaller players Thomas Cook5: 2010 is likely to be challenging as the weakness of the Swedish krona puts significant pressure on margins, and on long haul holidays. TUI: adding capacity recently, during 2009, the level of differentiated product offered by the Nordics business increased by four percentage points to 41%. This was driven by the opening of a new eco-friendly Blue Village in Rhodes and the creation of a new concept, Blue Unique, with 20 small unique hotels in several charter destinations.

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Tour operator market share:

TUI Travel plc


Passengers55 5.687m Controlled 2009 distribution56 85% Strategy

Thomas Cook
1.5m 2009 82.7% 2008 79.4%

2008 79%

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Further expand internet sales. Increase the proportion of customers who book our exclusive, concept hotels. Continue to build on the success of our world class, inflight sales. Consolidate our position in the major Nordic outbound destinations of Spain, Greece, Cyprus, Turkey and Thailand.

Key Brands

Market share:

http://www.thomascookgroup.com/downloads/pdf/Investor_Day_FI NAL_Website.pdf

55 56

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Market dynamics Thomas Cook: The outlook is more positive in the independent segment and, while there is still over capacity in the mainstream travel market, consolidation is possible with the proposed Sunwing merger with TUI. Destinations: Caribbean Winter focus Mex/ Carib, summer focus Europe Overcapacity in mainstream and no entry barriers Highly fragmented retail distribution Independent larger more stable market Three major players in the overall leisure market Thomas Cook, Transat, Sunwing/ TUI Transat and Sunwing/TUI mainstream focused USA, Europe, Mexico,

TUI Travel plc


Passengers
57

Thomas Cook
1.1m 2009 14.1% 2008 15.7%

Controlled distribution
58

0.54m (Including Mainstream and Specialists and Activity sectors) 2009 2008

Strategy

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Pursue flight and accommodation cost savings and strengthen hotel exclusivities. Grow independent travel through dynamic packaging technology and improved product line. Strengthen controlled distribution, especially online. Grow newly launched Financial Services division and expand product range.

57 58

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Key Brands

Canada Leisure Market:

With more than 1.1 million (compare with 0,54 m passengers of TUI ) passengers and hold up to 17% of Canadian Independent wholesale and Mainstream Market share (TUI : 3%), Thomas Cook is a leading player in North America leisure travel market.

Market dynamic Market conditions have not changed significantly in the German airlines market. Highly competitive market. German tour operator market less integrated than UK Stimulation of demand for travel products.

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Demand for flexibility & price transparency but growth is levelling out following consolidation.

Market position before the merges:

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Market position after the merges:

TUI Travel plc


Passengers
59

Thomas Cook
5.9m 34

Number of aircraft Retail Estate Product Focus

8.775 million (Including Mainstream and Specialists and Activity sectors) 48


Own shop: 428 Franchise: 974 Strong focus on mainstream Highest brand equity in the Market

Controlled distribution
60

2009 46%

2008 40%

Ownshop: 166 Franchise: 395 Strong focus on mainstream market Well positioned with Neckermann brand in lower/ budget segment. 2008 2009

Strategy

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management. Expanding the market share in the German-speaking volume market for cruises.

Focus on cost-saving, especially fuel related efficiencies. Drive synergies and other benefits through greater co-ordination of activities with other Thomas Cook Group airlines. Enhance benefits from cooperation with other external airlines.

Key Brands

59 60

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Market Share: In Germany, TUI performs better than Thomas Cook based on the fact that TUI not only focuses on airline, but also is the market leader in leisure travel market with 8.775 million customers (2009) 61 and achieves revenue of 4,144 (2009) which has an increase 3% over the prior year.

Germany Core Market Share

29% 40%

TUI Thomas Cook Rewe

17% 6% 16%

Alltour Others

In 2007, TUI fly faced problem because of the heavy assets. Number of 48 air craft was too big As a consequence TUIfly was sub scale to operate a mixed model effectively and too big to optimise tour operator margin. TUIfly also improved its result by cutting capacity in its loss-making scheduled flying routes. Capacity was cut by 16% in summer 2009, which led to a two percentage point improvement in load factors for its summer 2009 programme and resulted in a 10m improvement in margins over the prior year. During the year, TUI also announced that they entered into a strategic venture with Air Berlin, which will further de-risk the TUIfly business through an exit of the scheduled flying operation and will secure optimal capacity for the German tour operator. 62 Operating in the same markets, having many similarities in marketing strategy, TUI and Thomas Cook are the direct competitors of each other. From our group prospective, we see that TUI has higher market positions in the core market (UK & Ireland, Continental Europe and Airlines Germany, Northern Europe, North America). Capturing the advantages from the merges with Fist Choice, TUI travel plc achieve the biggest share holder in UK market. Across the core markets in Europe, TUI is successful at maintaining the market leading player.

61 62

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4.5. Product and Service:

Both focus on leisure travel63 Thomas Cook and TUI travel plc have many commons in products and services. However, it is not mean that the ways they segment their product and service are the same.
4.5.1. TUI travel plc

TUI has four main business sectors: Mainstream Sector 64, Specialist and Emerging

Markers Sector, Activity Sector and Accommodation & Destinations Sector.

63 64

See Appendix 1 See Appendix 1

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Mainstream Sector Mainstream is the largest Sector in terms of size (65%), financial performance and employee numbers. It comprises leading tour operators and power brands and operates a fleet of 146 aircraft and circa 3,500 retail shops. It has three divisions;

Northern Region, Central Europe and Western Europe.

Mainstream sector includes various package holidays65: It operates within two key segments of the leisure travel market: Mainstream holidays - which include the sale of differentiated and exclusively available products, long haul travel as well as more traditional package holidays: Sun holiday Winter holiday Family holiday Adult holiday All inclusive holiday Luxury holiday Component - which includes the sale of flights, accommodation, car hire, transfers and excursions either as separate components or together as part of customer assembled holidays Specialist & Emerging Markets Sector

65

Appendix 1

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The Specialist & Emerging Markets Sector is an international portfolio of travel businesses focusing on specific destinations, premium travel experiences or particular customer demographic segments often with differentiated and exclusive product. The sector consists of 40 businesses operating from North America, Europe and, most recently, emerging markets such as Russia and Ukraine. Specialist travel experiences include around-the-world private jet expeditions, student educational tours and tailormade trips to the Far East, Africa or Australia. Top selling brands include Mostravel,

Turchese and Hayes & Jarvis.

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Activity sector This Sector has over 40 activity travel businesses that operate under five divisions Marine, Adventure, Ski, Student and Sport. Each of these divisions has market-leading positions. The Adventure businesses take more customers to iconic adventure destinations than any other operator. The Sport businesses are leaders in supporter-led cricket and rugby

tours in Australia and the UK, while the Student businesses encompass everything from the traditional school trip to France, to trek holidays for groups of young adults in the Himalayas. This Sector also includes the leading yacht brands in Europe and the US and the worlds largest ski operator. Top selling brands include Crystal Ski, Moorings and Le Boat. Accommodation & Destinations Sector The Accommodation & Destinations Sector sells and provides a range of services in destination to tour operators, travel agents, corporate clients, and direct to the consumer worldwide.

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Services include hotel accommodation, transfers, excursions, round trips, organising meetings, incentives, conferences and events (MICE), cruise handling as well as integrated website solutions for our customers. A&D is structured along key business lines - Business to Business (B2B) and Business to Consumer (B2C). Top selling brands are TUI (used by a number of incoming agencies including TUI Espaa, TUI Hellas),

Hotelbeds.com and LateRooms.com.


4.5.2. Thomas Cook

Thomas Cook operates business in four sectors: Mainstream, Independent 66, Travel related to Financial Services67 sector, and Emerging Markets.

66 67

See Appendix 3 See Appendix 3

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Mainstream In mainstream sector, Thomas Cook provides their customers a wide range of choices for package holidays: Beach Holiday Clubbing Holiday Faraway Holiday Snow Holiday All inclusive holidays.

Independent travel With Independent travel products, travellers have changes to build their travel plans themselves from multiple components which Thomas Cook offers. Independent travel products include: Tailor- make :

Flights

Flights + Hotel Cruises City Break Extra services (car hire, cheap calls abroad, smart box, booking lounges and parking)

Hotels

4.5.3. Financial Services related travel of TUI travel plc and Thomas Cook:

Both Thomas Cook and TUI have many offer their customers many convenient financial Services related travel.
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Travel Insurance

TUI Travel plc Thomas Cook Overview Thomas cook and TUI both teamed up with Mondial Assistance to offer clients flexible travel insurance options. Products - Individual and Family Travel Insurance Winter Sport Cover (Optional) Excess Waiver(Optional) - L'TUR travel insurance package Travel Cancellation insurance Travel Interruption insurance Travel health insurance RundumSorglos Service Baggage Insurance Curtailment Protection - Family Travel Insurance - Single Parent Family - Couple - Individual - Special packages: ELVIA years 365-Full Protection Package ELVIA year-cancellationFull Protection Plus ELVIA years - cancellationFull protection ELVIA annual travel medical protection ELVIA Full Protection Package ELVIA cancellation-Full Protection Plus ELVIA cancellation-Full protection

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Travel Card

- TUI focus on debit card product such as TUI card in Germany(Visa) and TUI UK's Travel Money Cards - The cards are known as Thomson and First Choice Travel Money Cards and each have their own branding, available in Euro or US Dollar currencies. - The Travel Money Card programme is managed by Prepay Solutions and issued by MasterCard, ensuring global acceptance. - Benifits: Much easier to manage available balance Linked to travel insurance services Bonus for travellers Apply through phone and mail

Thomas Cook offers their customers Credit card services such as Thomas Cook Credit Card in UK (visa) and in Germany Neckermann Reisen MasterCard. - Available in many currencies. - Online card application - Benifits: Earn Travel Pounds everywhere you shop and save money at Thomas Cook and Going Places. 0% interest for the first 3 months from account opening on all card purchases. 0% commission on holiday money with no cash handling fee at Thomas Cook and Going Places. 0% interest on balance transfers for 9 months made within 60 days of account opening (2.99% fee applies). Special offers for card holders.

Foreigner currencies services and Travel Cheque

Buy currency and travellers' cheques online or in store Transfer money online or in store. Currency Card. Other Products Travel voucher Moblie banking In the matter of financial services related to travel, Thomas Cook and TUI have many similarities in services. However, Thomas Cook shows more concern about that area
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Buy currency and travellers' cheques online or in store

than TUI. Thomas Cook offers their clients more choices for financial services financial with the unique products such as Currency Card, Travel voucher, Mobile baking. Different with Thomas Cook, TUI concentrates on develop their debit card product, which is considered as new using trend. "More and more consumers are choosing to put their holiday money onto a prepaid card over more traditional options such as travellers cheques or foreign bank notes. Prepaid travel money cards make budgeting easier - travelers can only spend up to the value of funds that they load onto your Travel Money Card - and unlike a credit card, travelers don't need to pass a credit check to get one, nor is it linked to their bank account. Prepaid cards make it much easier to manage their available balance whilst away, and of course, the cost of use of the Travel Money Card when compared to most credit/debit cards is significantly lower." 68

4.6. The Boston Consulting Group box (BCG matrix)69

The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the product's market grows the better it is for the company. Placing products in the BCG matrix results in 4 categories in a portfolio of a company: 1. Stars (=high growth, high market share) - Use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. - Frequently roughly in balance on net cash flow. However, if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept. 2. Cash Cows (=low growth, high market share)

68 69

http://www.scluk.com/scl-powers-tuis-new-travel-money-cards valuebasedmanagement. Retrieved 2010, from http://www.valuebasedmanagement.net/

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- Profits and cash generation should be high, and because of the low growth, investments needed should be low. Keep profits high. - Foundation of a company 3. Dogs (=low growth, low market share) - Avoid and minimize the number of dogs in a company. - Beware of expensive turn around plans. - Deliver cash, otherwise liquidate 4. Question Marks (= high growth, low market share) - Have the worst cash characteristics of all, because high demands and low returns due to low market share - If nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog. - Either invests heavily or sells off or invests nothing and generates whatever cash it can. Increase market share or deliver cash. Based on the products of TUI and Thomas Cook mentioned above, we can fill them in 4 categories of BCG matrix.

TUI Travel plc


Star Activity Sector Specialist & Emerging Extra services (renting car) Package holiday Independent holiday (city breaks), Financial services (foreign currencies services and Money card, Travel insurances) Accommodation and Destination (organising meetings, incentives, conferences and events (MICE)) Hotels, resorts Airlines. Cruisers

Thomas Cook
Component holiday, Extra (car hire), Activity Sector. Accommodation Package holidays Specialist Financial services related to travel

Cash Cows

Question Marks Dogs

Hotels Airlines Cruisers

4.7. Supply chain: Page | 85

TUI and Thomas Cook have the same basic supply chain. They both use the product source such as Hotels, Transportation Services, and Ancillaries from suppliers or from their own company, and then they delivery products and services for customers. Retails and agents play the role as the bridges between the travel company and the customers, will provide the company the market and clients information and demands.

Thomas Cook Group_nov strategy presentation - web version - final.pdf

Though TUI and Thomas Cook share the same basic supply chain, there are still some differences:

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TUI Travel PLC TUI is address as direct supplier in travel industry. As we mentioned earlier in chapter 4 (Management and Organisation), TUI travel plc is a part of TUI AG, which also includes TUI hotel and Resorts and TUI Cruise. This fact gives TUI the advantages to offer their customers hotels and services with high levels of quality and standards. Beside have their own airlines, TUI also have a stronger cooperation with the biggest European airlines, for example Garman companies, KLM and Turkish Airline. The payment of products and services are in Euro. With the offices are mainly located in Germany, so their main target markets are Europe, especially Germany. Thomas Cook Thomas Cook is more like Travel intermediaries, so they has wider range of hotel offers for their customers from luxury to cheaper price hotels. Like TUI, beside have their own airlines, Thomas Cook also cooperates with some big airlines such as British Airway, KLM. The payments are in Pound. Thomas Cook has a better reputation in UK. They targets mainly on customers are UK.

http://www.thomascookgroup.com/downloads/pdf/Investor_Day_FINAL_Website.pdf

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4.8. Price

As a Travel intermediary, Thomas Cook offers the cheaper prices for the same services than TUI. Cooperating with other hotels and airline companies, Thomas Cook forces on low cost travel market with flexible choice for customers. In contract, TUI as a direct supplier, targets on high level services standards, which will be definitely more expensive. In order to compare the services prices between Thomas Cook and TUI, our group have carried out a small research. We went to website of TUI and Thomas Cook, book a same holiday (2 persons) for the same time: Destination: Turkey Type: All Inclusive Hotel: Titanic Beach Rst (4 stars) As we can see, with a same package holiday, Thomas Cooks price is 1904.78, about 140 cheaper than the price that TUI (2046 offers). This fact also reflects their aims to reduce the service costs, especially accommodation cost in Thomas Cook pricing

http://www.thomascookgroup.com/downloads/pdf/Investor_Day_FINAL_Website.pdf

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strategy. TUI has a higher services price, but also they offer more value for customers such as more baggage allowance (20kg per person) than Thomas Cook (15 kg per person).

4.9. Promotion

Thomas Cook and TUI travel are both such the big travel companies, who own hundreds of brand names. Brands are more than names and symbols; they represent consumers perceptions and feelings about the products, services and its performance. This requires the specific promotion strategies for each of their brand name. In common, their promotion methods are quite similar with the basic ways: Travel Brochures Agencies including through posters, flyers Advertisements including in newspapers, magazines, trade publications for the travel industry Direct mailings to current customers E-mails Banners and links on the Internet Flyers Radio and Television commercials Joint Promotions and Sponsorship

Scholarships

The TUI.com Reisemagazin (TUI Travel Thomas Cook Travel Magazine magazine) Thomas Cook Travel Magazine has a Magazine has been implementing the quarterly readership of over two million. TUI.com Reisemagazin since November The magazine is distributed on all Thomas 2008. The goal is the production of a Cook Group flights including Airtours, Club regular, multimedia magazine that speaks 18-30, Direct Holidays and Signature. The to the reader's emotions using all of their editorial content is topical, travel-related senses. This is something that is usually and aimed at holiday goers. It incorporates not possible for conventional travel destination specific content alongside
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catalogues. The monthly, online page turning travel magazine surprises the reader with travel videos, large multimedia picture galleries, inciting sounds and spectacular flash effects. The reader goes on digital trips, discovers new places and holiday trends and can access travel offers with the click of a mouse and book his holiday directly online. Thomas Cook

lifestyle features. The magazine also features the duty free products and menu available onboard. The readers are affluent holidaymakers, with core ages between 25 and 54, and are evenly split between male and female.

Thomas Cook promotion focus on: - Aviation and climate change - Supporting destination communities - Protecting children - Partnering with suppliers - Quality - Animal welfare Aviation and climate change: They are hunting for travel industry climate changing; this is to help decreasing CO2 flying. The travel industry also contributes to climate change. While aviation currently accounts for less than 3% of the worlds carbon dioxide emissions (or CO2, the principal gas responsible for climate change), travel is a rapidly-growing industry and improvements in fuel efficiency will be insufficient to offset this rise. Some customers have started to avoid flying so as to reduce their carbon footprint. At the same time, governments are regulating to reduce emissions through taxes and carbon trading schemes, thus increasing carbon-related costs for business and consumers. And increased volatility in fuel prices represents a threat to our airlines. This is clearly a pressing issue requiring sustained and substantial action from the travel industry, and one it can play a significant part in tackling. Supporting destination communities: Sustainable tourism is about holidaying with respect for local communities: preserving natural resources, buying local and paying fair, honouring local cultures, protecting wildlife and preserving destinations for the future enjoyment of others. Thomas Cook UK & Ireland has been particularly active in this area and is spearheading this work through their partnership with the Travel Foundation, such as: Sponsoring education in Turkey, Working with hotels, The Travel Foundation Protecting children: The sexual exploitation of children in tourism includes the production of child pornography and the buying and selling of children for prostitution. Many tourist
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destinations do not have the infrastructure to protect these children or offer them a way out. And when the law is enforced in one destination, the sex offenders move to the next. It is therefore vital that the tourism industry gets involved and works to drive out the exploiters who use hotels, bars and other tourist facilities to do their trade. Partnering with suppliers: Travelife supports hoteliers to implement sustainability measures and to help customers reduce their impacts. By training our employees as Travelife auditors, we can encourage the hotels to win Travelife awards. And by including the award logos in our brochures, we enable customers to make informed decisions and drive business to the more sustainable hotels. This creates an incentive for more hotels to adopt sustainable business practices. Quality: A key part of quality management is being open to complaints and seeing how valuable they are to the company. A complaint is someone telling us how we can make our customers happier, and that is indispensable business intelligence. What is more, by responding to a complaint promptly, we can transform a customers dissatisfaction into a view of Thomas Cook Group as a company that cares. Animal welfare: Examples of how these freedoms can be denied to animals as a result of tourist activity include: inappropriate use of animals, including being made to perform in ways not natural to them or being used as photographic props when whale watching, tourist boats can get between a mother and her young, resulting in a separation that is disastrous for the baby Large numbers of tourists getting too close can disrupt hunting and feeding patterns for wild animals, and some can become very ill if exposed to human conditions like colds or diarrhoea.

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TUI Travel plc As a part of TUI AG, TUI travel plc develop promotion strategy based on social responsibility: Futouris; promoting education, protecting the environment and nature Sport sponsoring TUI Foundation; supporting in education and training for children and young people TUI Sponsorship ECPAT Futouris: Futouris is a non-profit association operating under the aegis of DRV, the German Travel Association. It supports projects to improve living conditions, promote education, protect the environment and natural resources and preserve biodiversity in our destinations. Sport sponsoring: Sport, whether on grass, ice or track, provides us with a bit of a break in our everyday lives. TUI, Germanys leading tourism group, has found its mission here to put a smile on peoples faces. For several years now, the Hannover travel group has not only been a partner of many professional teams but has also been supporting several sporting events in Germany and abroad. Such as: Hannover 96, Hannover Scorpions, the international marathon on the Spanish island of Majorca, Marathon Hanover, Eagles Charity Golf Club. TUI Foundation: The TUI Foundation supports projects with financial or material resources allocated within the framework of an application-based system. However, it also undertakes its own projects. As a service-oriented and international group, at the same time we try to promote initiatives established with a basic principle compatible with our own everyday operations. TUI Sponsorship: Since 1995, employees at TUI in Hanover have been annually supporting a charitable welfare project. On an annual basis one charitable project is chosen and supported. At the end of the year, management then presents the amount collected as a cheque to the institutions. To date a sum of around 410,000 euro has been collected for direct help on the ground. The projects receiving support range from life-help groups and all-day schools and lunch clubs for disadvantaged children, through to help for children with cancer and their families.
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ECPAT: Throughout the Group the TUI corporate companies are united in fighting against child prostitution. In the majority of cases this is carried out in cooperation with the international child protection organization ECPAT. Follow the new promotion trends; both Thomas Cook and TUI are changing their strategy to have the better image about green travel companies. The two companies concern on activities which are high concerned topics such as climate changing, protecting children and animal welfare. Delivery friendly environment messages, TUI and Thomas Cook aim to sustainable marketing strive for the long run survival of customers and the business that provide for them. Highlight promotion: TUI has a bigger budget for marketing. The Budget allows them to develop many media campaigns, which build an impressive image in the customers mind. Beside design company logo as a smile, to emphasise more on the message of customer oriented company, TUI have their own songs, such as the song Lets make people smile or Touch the sky. Focus on cheap price holidays, flights and hotels, Thomas Cook have other special way to promote their services with a smaller marketing budget. For instance, they offer special promotion flight program for journalists, especially with British airways.

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4.10. Distribution 4.10.1. Booking Routes

TUI and Thomas Cook have the same basic distribution channel with same basic Booking Routes

Advantages and Disadvantages of the Booking Routes:

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4.10.2. Distribution channels

TUI
Travel Agencies Own retail shops Franchises Third- party distributions Ecommerce

Thomas Cook
Own Travel agencies Franchises Third- party distributions

All most every brands have the brand Thomascook.com: Each country website for customers to book has one website for online services online booking. http://www.firstchoice.co.uk/ http://www.thomascook.com/ http://www.thomson.co.uk/ http://www.thomascook.de/ http://www.arke.nl/wintersport.aspx http://www.thomascook.pl/ http://www.tuifly.com/de/ http://www.thomascook.fr/ http://www.neckermannreisen.de/

Telephone Selling

Call Centers

Call Centers

4.10.3. Cross Channel Marketing

TUI and Thomas Cook both use same distribution channels: E-Mail, Direct Booking, (Re-) Auctions, and Service Hotline. As we can see on the booking chart, Thomas Cook and TUI use cross channel marketing, which means use of one marketing channel (such as direct mail or internet) to support or promote another channel (such as retailing)70 . Basically, customers are given some sensations about travel services, and invite the customers curiosity by offer the links go to the website, or the numbers to call for the further information. That also means that customers often use various channels for information procurement and product/ services purchasing. The various channels are dedicated to different customer segments in order to reach the full market potential. In some cases an individual channel can compensate drawbacks of other channels. For example, the lack of face-to-face communication experienced in online tourism channels can be compensated by calling the customers attention on available service hotlines for supporting him on specific questions. Most consumers notice the variety of information and distribution channels while switching between them. Based on this number of perceived channels the customer measures the size of the company which is an important issue. For the
70

http://www.businessdictionary.com/definition/cross-channel-marketing.html https://ie-wiki.uni-muenster.de/index.php?title=Multi-Channel_Marketi

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market leaders like Thomas Cook and TUI, in order to maximize their market power, that again increases the trust level of a customer towards the company. With approximately 3,500 retail shops in continental Europe, the UK & Ireland and approximately 30 million customers per year, TUI have wider distribution channel than Thomas Cook (3400 owned and franchised travel stores). Apply Cross Channel Marketing, the website of TUI additionally offers a complete online version of their print catalogue which can be browsed for offers by thumbing through the pages .The online catalogues like the printed versions are assorted by holiday destinations, seasons and the separate operators of the TUI group. The TUI Reisemagazin provides interested parties with multimedia information on selected holiday offers in form of an attractive online magazine. It contains photo galleries and videos and links to the relevant partners. The website furthermore integrates a regular newsletter subscription in order to inform potential customers about news and special offers. The front page directly links subsidiary companies of the TUI group like TUI Cruises and TUIfly. Thomas Cook flyers and e- magazine also provide customers links to thomascook.com or the telephone numbers to contact their call center.

4.11. Ecommerce

Nowadays, Internet has an increasing impact to human life. Ecommerce become a new business trend. Both Thomas Cook and TUI Thomas Cook are now moving into the online channel in a serious way.
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TUI is successful at building a unified customer database that helps it compete effectively with established rivals like Thomson and First Choice. Thomas Cook was faster in UK online market when in1997, www.thomascook.com was launched, making it the first U.K. retail travel agency to offer customers a way to request flight availability and buy vacations, travelers checks, foreign currency and travel guides over the Internet. Since then, thomascook.com has become a business in its own right. Both Thomas Cook and TUI booking websites is user friendly. It is really easy for customers to search for information about the holidays, book and do payment online. Both companies websites are designed to allow clients approach easily with wide range of travel options.

Thomas Cook has series of booking website thomascook.com, while TUI has different websites for different brand names. So it will be easy for customers when they want to book a product or service of Thomas Cook in different countries, they can just go to Thomas Cook website with different domains, such as thomascook.de for Germany, thomascook.fr for France.

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We can see both TUI and Thomas develop ecommerce activities by the same strategies: Use strong brands to attract customers online and offline Build on our already leading travel site Use travel expertise Develop a multi-channel customer proposition Use customer insights to optimise offering and pricing Increase sales of ancillaries Invest significantly in systems Through being the first U.K.online retail travel agency, Thomas Cook still have to stand behind TUI website about number of weekly visits in UK.

Thomas Cook Group_nov strategy presentation - web version - final.pdf


4.12. Conlusion for Marketing chapter

In the matter of marketing, in our groups opinion, TUI is performing better than Thomas Cook. TUI operates in more market sources, and they are the leading player in almost of the core markets. The advantages from the bigger scale and heavier assets allow TUI has more budgets for marketing, which is really helpful in building a stronger image with customers. However, maintaining too many brand at same time is higher the expenses for marketing of TUI. This will definitely lower the companys net profit, and keep the services in the high prices. As direct competitor with TUI in every core market, Thomas Cook also has their own marketing strategies to compete. Marketing with the smaller budget, Thomas Cook develop the unique promotion offers, focus on special groups of customers. Offering the cheaper prices and effective promotion strategies, Thomas Cook is strengthening their market position.

Chapter 5 Management and Organization:


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5.1. Company Profile

5.1.1. Company Background


TUI Travel PLC TUI Travel PLC is a part of TUI AG, which is Europes leading travel group comprising a controlling stake in TUI Travel (tour operating, online and high street distribution, airlines, incoming agencies), TUI Hotels & Resorts and the cruise ship business. In addition, the group holds a 43,33 per cent stake in the container shipping line Hapag-Lloyd. In the short financial year 2009 the turnover of TUI AG was 13.1 billion with total earnings of 656.6 million (underlying EBITA).1 On 30 September 2009 the headcount totalled 65,000 employees.

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TUI Travel PLC is a FTSE 100 international leisure travel group listed on the London Stock Exchange. It was formed on 3 September 2007 by the merger of First Choice Holidays PLC and the Tourism Division of TUI AG, which owns 43% of the company, operating in over 180 countries and serving 30 million customers in 27 key source markets. It is headquartered in Crawley, West Sussex, England. It is a constituent of the FTSE 100 Index, with around

157aircraft and circa 3500 retail outlets in Europe and employs 60,033 people worldwide. The company mainly serves the leisure travel customer and is organized and managed through four business sectors: Mainstream, Specialist and Emerging Markets, Activity and Online Destination Services. Thomas Cook Group PLC Thomas Cook is the worlds best-known name in travel, thanks to the inspiration and dedication of a single man. Thomas Cook began his international travel company in 1841, with a successful one-day rail excursion at a shilling a head from Leicester to Loughborough on 5 July. From these humble beginnings Thomas Cook launched a whole new kind of company devoted to helping Britons see the world. In February 12, 2007,The leading German retailer KarstadtQuelle AG is to merge its Tourism subsidiary, Thomas Cook, with the leading British travel company MyTravel. The newly established company will be named Thomas Cook Group plc and will be traded on the London Stock Exchange. KarstadtQuelle will hold 52 percent in the new company and will consolidate it fully. Thomas Cook Group plc is one of the world's leading leisure travel groups with sales of around 9 billion (12 billion), 22.3 million customers, 31,000 employees, a fleet of 93 aircraft and a network of over 3,400 owned and franchised travel stores and interests in 86
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hotels and resort properties. It operates under five segments: UK & Ireland; Continental Europe (Germany, Austria, Belgium, France, the Netherlands, Poland, Hungary, Slovenia and Slovakia); Northern Europe (Sweden, Norway, Denmark, Finland), North America (Canada and USA); and German airlines operating under the Condor brand.

5.1.2. Company Scale

Employees Operating countries Aircrafts Customers

TUI Travel plc 60,033 180 157 30.000.000

Thomas Cook 31,000 93* 95 22.300,000

* 73 of the countries Thomas Cook operates are under the daughter company Condor and in the rest of the 20 companies Thomas Cook plc operates by itself. TUI has a bigger scale and operates business in wider market. They have heavier assets with180 air craft (Thomas Cook 95) also have larger distribution channel.
5.1.3. Mission Statement

A Mission Statement of the organizations purpose what it wants to accomplish in the larger environment 71. A mission statement, in management prospective, guides the strategies and structure of company UK & Ireland marketing orientation. In matter of Mission Statement, TUI Travel PLC and Exceptional Service From Exceptional People Thomas Cook Group PLC have different Continental Europe and Airlines Germany perspectives.
To perfect the personal leisure experience.

Under the global vision WE GO FURTHER Northern Europe TO MAKE DREAMS COME, Thomas Cook Further we go to make dreams come true states itself with four different missions based on five main divisions: UK & Ireland, North America Continental Europe and Airlines Germany, To be the best travel company in the world to travel with, work for, and invest in Northern Europe, North America. The differences in the Thomas Cook s Mission Statements in different divisions are related on its flexible business models and concentrated marketing strategy for every different geography market. Conversely, TUI travel plc does not publish any mission statement. Being confident about the reputations as one of the market leaders in Tourism industry, the Leader of TUI believed it is not essential to have a sentence to describe company's function, markets and competitive advantages; and state its business goals and philosophies, which have already become the famous concepts. TUI Travel PLC does not have a Mission Statement. We have a stated strategy which is to create superior shareholder
71

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value by being the worlds leading leisure travel group providing customers with a wide choice of differentiated and flexible travel experiences to meet their changing needs To enable us to achieve this goal we have identified four key strategic imperatives which are linked to our KPIs.72 TUI Travel and Thomas cook plc have the vision, which is quite similar. As customer oriented companies, customers are very important for both companies, because the more customers they have the better for the company. TUI and Thomas Cook wants to make sure that their customers come back every time when they think of travelling. As already mentioned in the table above, the vision of Thomas Cook is that they go further to make dreams come true. Thomas Cook tries to do something extra for the customers. In long-term both companies want to grow and be the biggest travel agency in the world.
5.3.4. Vision and Values:

TUI Travel plc Their common vision and values unite their across the Group and they call this their TUI Spirit. Their vision is Making Travel Experiences Special and their four values are: Responsible leadership Customer obsessed Value driven Playing to win Winning behaviours have been developed to help embed these values in every day working life in a number of ways. These behaviours allow them to truly engage in their work and optimize their performance as individuals and as a business. Thomas Cook

These values are the focus for ensuring that every Thomas Cook employee embraces what they stand for and are PROUD to work with us delivering customer service thats second to none.

72

FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs

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TUI Travel and Thomas cook plc have the vision, which is quite similar. As customer oriented companies, customers are very important for both companies, because the more customers they have the better for the company. TUI and Thomas Cook wants to make sure that their customers come back every time when they think of travelling. As already mentioned in the table above, the vision of Thomas Cook is that they go further to make dreams come true. Thomas Cook tries to do something extra for the customers. In long-term both companies want to grow and be the biggest travel agency in the world.

5.3.5. Sustainability Development and Social Responsibility

Sustainability development becomes more important for companies specially for transport companies. We can say that TUI Travel and Thomas Cook are also transport companies because the offer their customers a service with aircraft. Nowadays more people want to travel environmentally conscious, because the environment is a big issue for us and the next generation. Companies like TUI and Thomas Cook have to take in account the environment.

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TUI Travel Throughout the year, sustainable development has continued to be an important part of the business agenda for TUI Travel. They aspire to lead in sustainable development within the leisure travel industry. In the long term, they believe this goal will help build shareholder value for TUI Travel and contribute to operating a strong business now and in the future. TUI Travel is listed on the FTSE4Good Index in recognition of its transparency and for meeting strict social, environmental and governance standards. It is the highest placed travel company, at 16, in the 2008 Good Companies Guide The Observers annual ethical ranking of FTSE350 companies. TUI Travels first full Sustainable Development Report was published in July 2009, with independent verification of their targets by Bureau Veritas. For the second consecutive year, they have been included in the Carbon Disclosure Leadership Index, which highlights the top 10% of FTSE350 companies that have displayed the most professional approach to climate change disclosure. Sustainable development strategy of TUI Travel Plc During 2008/2009, they developed a Group sustainable development policy in conjunction with key colleagues, articulating their vision and approach to sustainable development. The Group Code of Conduct covers a wide range of sustainability issues, including human rights, business ethics and transparency and commits TUI Travel to upholding the principles of the UN Global Compact. TUI Travels sustainable development strategy is based on consideration of the key issues affecting the Company, now and in the future. It has been developed in consultation with internal and external stakeholders. They encourage all TUI Travel businesses to develop their own sustainable development strategy, aligning with Group priorities. At the end of 2008/2009, 73% of TUI Travel businesses had their own sustainable development strategy. Policy and mitigation for Groupwide risks relating to sustainability are facilitated by the Group Risk Management and Sustainable Development Departments, with responsibility for managing such risks also shared by the businesses themselves. Thomas Cook plc The last year has proved a testing time for all areas of business, not least the travel industry. The global economic downturn brought with it a decline in international tourism in 2009, intensified by many other factors including consumer confidence, terrorism incidents, fluctuating exchange rates and the outbreak of swine flu. At Thomas Cook Group, their response to challenging market conditions is to work harder and go further to make dreams come true for their customers. They recognize the many virtues of travel, the positive cultural exchange and the boost to local economies, but they are also aware of the potential impact on the environment, societies and local cultures. The travel and tourism industry has a responsibility to operate in a sustainable way and Thomas Cook,
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which founded its business with clear social and educational intentions, is proactive in this area. They aim to have sustainability at the core of their business and feature it as an integral part of their strategy, particularly when it comes to the environment. These responsibilities no longer sit on the periphery; their importance represents a genuine business risk. Society, customers, investors, governments and communities no longer look for, but demand that both time and money be invested in the preservation and protection of the incredible people and places they come into contact with. Over 160 years ago a former preacher, Thomas Cook, devised the first package holiday. Since then, the business he founded has helped millions of people to relax, unwind and broaden their horizons. Thomas Cook didnt just want people to have fun. He believed affordable travel could change working peoples lives for the better. His company was inspired by a strong sense of social justice and moral responsibility: what today they call corporate social responsibility (CSR). Today, theyre still inspired by their founders values. They believe they make a world of difference not only to their customers, but to all the people whose lives they touch. Their mission is to perfect the personal leisure experience. And that includes managing their activities in a morally and socially responsible manner. We compare the two companies by these two points; we can say that both of the companies are trying to work on a very sustainable way. However, TUI Travel is working more on sustainability and Thomas Cook concerns more about the responsibility for the people in the areas they are cooperating.

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5.2. Company Organization

5.2.1. Organizational structures


Both operating in travel industry, however, TUI and Thomas Cook are using different form of departmentalization, which means: the basic on which job are grouped together73 TUI Travel plc Organizational structures TUI is using Geographical Departmentalization, which means groups jobs according to Geographical Region.

Adv antages and disadvantages of Geographical Departmentalization74 Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geography market better Disadvantages Duplication of functions Can feel isolated from organization areas

other

Broad of Directors: The Company is controlled through its Board of Directors the Directors at the date of this report are: Directors name 1. Horst Baier 2. Dr Volker Bttcher 3. Paul Bowtell 4. Tony Campbell 5. Clare Chapman 6. Bill Dalton 7. Rainer Feuerhake 8. Dr Michael Frenzel 9. Jeremy Hicks 10. Sir Michael Hodgkinson Independent Director 11. Peter Long
73 74

Title Non-Executive Director Managing Director, Central Europe Chief Financial Officer Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Chairman Non-Executive Director Non-Executive Deputy Chairman Chief Executive

and

Senior

Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc. Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc.

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12. Johan Lundgren 13. Dr Erhard Schipporeit 14. Dr Albert Schunk 15. Harold Sher 16. Giles Thorley 17. William Waggott

Managing Director, Northern Region Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Commercial Director

TUI Travel plc Organizational structures chart:

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Thomas Cook Organizational structures Thomas Cook has a more flexible organization structure, which is combined by Geographical Departmentalization and Functional Departmentalization (Groups Jobs according to function).

Advantages and disadvantages of Geographical Departmentalization75 Advantages More effectives from putting together people with common skills, knowledge, and orientations. Coordination with function areas In depth specialization. Disadvantages Poor communication across functional areas Limited view of organizationalngoals

Broad of Director

The Board is chaired by Non-Executive Chairman, Michael Beckett. In addition to the Chairman, the Board currently includes three Executive Directors and five Non-Executive Directors. Each of the committees of the Board is chaired by an Independent Non-Executive Director. The Group Chief Executive Officer chairs the Group Executive Board, which oversees the strategic development and operational management of the Group's businesses. The Group Chief Financial Officer and the Chief Executive Officer, Northern Europe & Deputy to the Group Chief Executive Officer are also members of the Group Executive Board.

75

Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc.

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Thomas Cook Organizational structures chart:

5.3. Human Resources Management

5.3.1. Recruitment 5.3.1.1.TUI Travel plc


Apprenticeship programme There is extremely high demand for the Apprenticeship programme at TUI, with over 40,500 website enquiries and 15,000 applicants each year. Due to the high volume of applicants, an extensive and rigorous selection process is in place for the 450-500 positions. This includes an online assessment focusing on literacy and numeracy skills, an interview and a taster day in a branch which allows them to experience the real working environment and understand what the role entails. We always use a taster day. So what we do is we bring people into the location and see how they get on with the tasks which are typical of the day. And what we do find is that lots of people will either immediately realise its for me or its not for me. (Andy Smyth, Accredited Programmes Manager)76 In addition to looking for people with literacy and numeracy skills, TUI also look for people with strong personal attributes such as motivation and personality. In order to get onto the apprenticeship programmes, were actually looking for people who do have strong numeracy and literacy skills and were looking for people with personality. What we want are people who are motivated. We want people who are driven to succeed." (Andy Smyth, Accredited Programmes Manager)77 Content and delivery
76

http://www.people1st.co.uk/webfiles/Research/Case%20Studies/Travel%20Training%20Case%20Studies/TUI _Case_Study_Oct_08.pdf 77 http://www.people1st.co.uk/webfiles/Research/Case%20Studies/Travel%20Training%20Case%20Studies/TUI _Case_Study_Oct_08.pdf

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To successfully complete their apprenticeship, apprentices must complete an NVQ, three technical certificates (providing the knowledge and understanding which underpins the NVQ) and two key skills as shown in the table below:

Apprentices receive all the normal training a non-apprentice receives such as a first day induction in store, health and safety training, daily store briefings and an hour of training each week where the store is closed. In addition to this, TUI provides the following support to help apprentices complete their programme: A two day Welcome Event Five hours of study time per week E-learning Six formal off-the-job training days per year, with a focus on completing the technical certificates There is a strong support network available to ensure the apprentice receives all the help they require. This includes an Apprenticeship Expert in each region whose role is to coordinate training and ensure that the apprentices are progressing in line with the programme. There are a number of Shop Managers in each region who are responsible for the delivery of training to apprentices. Each apprentice is also allocated a workplace mentor based in the same shop as them. Most mentors are ex-apprentices themselves and are there to provide support, inspiration and to help them progress. Apprentices are assigned an assessor to guide them through the framework and support them with action planning. They visit on a monthly basis and ensure that learning is taking place. An important element of the programme is that the content has been designed to meet the needs f their own organisation and all materials and workbooks are bespoke to TUI. Benefits of the apprenticeship programme Research carried out by People1st has highlighted the main benefits of the apprenticeship as being: Increased recruitment, retention and motivation of staff
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A demonstration of an organisations commitment to training Supporting performance and career development Providing cost effective training A programme that is consistent and structured A programme which complements in-house training Supporting the development of skills Increased loyalty to the business At TUI the key business benefits of apprenticeships have been higher staff retention rates and greater sales performance. This is illustrated for example, by ex-apprentices who regularly featuring in their top-sellers lists. An example was also given of an ex-apprentice who achieved 1.3 million in sales in one financial year. The average is 350k. This individual became a shop manager at 18.TUI has examined how ex-apprentices performance compares to non-apprentices in relation to sales revenue generated. The table below shows clearly that the apprenticeship programme helps improve sales performance with ex-apprentice Travel Advisors achieving over 16% more sales than non-apprentices. In short, TUI is an organisation which has a reputation for offering a first class apprenticeship programme. They have aimed to make it the programme of choice and this is demonstrated in the opportunities and career development available for apprentices. It is unsurprising then, that demand for Apprenticeship places greatly exceeds supply. For TUI the return on investment of the apprenticeship programme is a clear increase in sales performance and greater staff retention for those who have been through the programme, compared to those who havent. Looking to the future, TUI intends to build on their successful apprenticeship programme by increasing places by up to 50% in the coming year. TUI Horizons78 TUI Horizons is a development programme for middle managers who have been identified as management talent with the potential to take up senior general management positions across the Group. TUI Horizons is run as a virtual business school, using a number of external experts and internal specialists from across the Group covering business topics including Tourism and the Business Environment, Strategy and Finance. During 2009, the programme ran three times, with 65 managers participating. In 2010, they plan to extend the scope of TUI Horizons. In addition to the core modules, they will offer a number of one-day master classes on specific subjects that will provide ongoing opportunities for learning and networking.

78

). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/

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Recruiting for their long term success79 Their International Graduate Management Scheme is part of their strategy to recruit and develop the right people to ensure the long term success of their business. Over 18 months, trainees take on assignments in different parts of the Group lasting three/four months and also receive additional personal training and support during this time. At the end of the scheme, their trainees are offered permanent positions where possible. Twelve trainees from nine countries Belarus, China, France, Germany, Hungary, India, the Netherlands, Sweden and the UK participated in the International Management Trainee scheme in 2009. This included seven trainees who were recruited into the scheme in 2009 and five trainees who joined the scheme in 2008. This year, three trainees have joined the Group in permanent roles, as Sales & Retail Manager in Germany, Staff Incentives Manager in UK & Ireland Mainstream and Project Manager for Specialist & Emerging Markets in Russia.

Organisation effectiveness80 They support organisation effectiveness through talent management and recruitment processes. Talent across the Group is reviewed regularly at Board level and they are focused on retaining and developing individuals to drive the business forward. To meet seasonal demands, they move their topperforming frontline colleagues between retail, overseas representation and airline cabin crew roles where possible. This develops a multi-skilled workforce with year-round experience of delivering service to their customers. they use the most effective recruitment methods in the countries in which they operate and encourage the sharing of skills and knowledge to suit both the business and their colleagues. As part of their recruitment approach, they actively promote career opportunities across the Group to enhance the mix of professional and general management skills.

Reward programmes81 They operate competitive reward programmes to reinforce and support their overall colleague engagement strategy. In addition, variable compensation in the form of annual and longer term incentives helps drive the high performance that their results demonstrate. This year they introduced an aligned incentive programme for their most senior leaders throughout the Group. The programme rewards financial performance of the business in which the individual works. In 2010, the programme will also take into account how that performance was achieved by mapping the individual leaders actions to their winning behaviours. To aid retention of talent and ensure focus on longer term shareholder value creation, at least onequarter of the annual bonus achieved is deferred into TUI Travel PLC shares for three years or more. The majority of their colleagues participate in local benefit programmes including retirement benefit schemes and generous holiday discounts. In the UK, colleagues are able to purchase shares in the Group through their Share Incentive Plan that provides one free share for every four shares purchased.
79

). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 80 . Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 81 . Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/

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5.3.1.2. Thomas Cook

Theres a clear progression path for every employee overseas (Elinor Carr, Learning and Development). As well as receiving regular training throughout the season, staff are offered a range of development opportunities. One such opportunity is STARS Senior Training and Recognition Scheme - which has three levels and provides staff with training opportunities which are clearly linked to career progression.

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The recruitment process onto STARS is rigorous and the required standard must be reached. Staff are expected to complete a range of tasks which have direct links to the company PROUD values. The tasks can be small (such as controlling the airport) or large (like organising a fund raising event in resort). Staff are expected to achieve a pass grade for each task and only when they have achieved the pass grade for all tasks set will they have passed the STARS in resort stage. A key benefit of STARS is that it assists with succession planning, enabling suitable employees to be identified and trained for the next level. This in turn can help ensure staff are retained and promoted from within the business. STARS also provides a clear career progression route for staff wish to develop and move up the career ladder. The main benefit of the STARS programme is that its very clear to every member of staff who starts working with Thomas Cook that there is the opportunity for career progression and for development. (Elinor Carr, Learning and Development).
5.3.2. Job Selection

As the international company with hundreds of brand names, TUI and Thomas have different to recruitment requirements to hire different kind of people working under different brands name.
5.3.2.1.Finland TUI

Finnmatkat children's and sports / activity leader Bamsekerho director and Sports, and Super Kids Guide - infectious joy of life! Itching to spread joy through the busy children and adults with a Finnmatkat Blue Village, Exotic-Blue Village or Blue Star -In different parts of the world? Bamsekerho-director provide 3-6 years of age referred to Bamsekerhoissa. Finnmatkat children's smallest clubs, our customers can play, and experience the adventure of any kind and get new friends. You are responsible for the quality of the implementation of the agreed program. Blue Star hotels in replying to Finnmatkat 7-12 years old children Super Kids -Clubs, exciting and fun sports activities for the planning and implementation. Sport & Super Kids-guide and are planning to pull all kinds of shallow water exercise in the morning and beach volley tournaments and After Beach quizzes. Take care of the Super Kids-lastenkerhostamme, which offers sports and adventures from 7 to 12 years of age for a few hours a day.

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Enthusiasm and service agreement Energi September, and a genuine enthusiasm are the most important tools. You are also service-oriented and know how to treat and help every kind of travel according to the situation. A unique team spirit Finn Voyage is a unique spirit of service, known as the Blue Spirit. As soon as the first part of your day since you're the team that solves the challenges together and whose members support each other always. You'll also get a sense of belonging, much experience and often life-long friends. Not thrive in Also holidays in resorts, which are other get paid large sums of money, are the work benefits. However, you must also be prepared for hard work, stay helpful and stressful conditions of service as a spiritual and, of course, also spend long periods away from another culture intimately. Blue Academy Gran Canaria If you recognize the description of yourself and you meet the basic requirements presented below, you can search for Blue Academy Travel School. Successfully passed the course guarantee you a permanent job, and you will experience the Blue Spirit, in fact. Basic Requirements

high school diploma or equivalent Finnish language excellent oral and written communication skills good knowledge of English experience

Children's Director

child or youth groups working with the training

Sports Guide

Coaching, or exercise control of experience / education

The benefit is calculated


Swedish or other Nordic language skills or any other language previous stay abroad esiintymisvarmuus / habit microphone
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5.3.2.2. Finland Thomas Cook

Childrens guide Children & Youth as a director you must ensure that children feel comfortable and have something fun to do - variety of activities and games, pulikointia swimming pool as well as spiritual adventure racing. A bit older kids, organized activities such as crafts, play & chat, football and water sports. You are responsible for all these activities for the organization and inspiring in their own way with you are also children and young people excited about and participate in them. The work is carried Sunwing-hotels. Requirements Experience in working with children is needed for this job. We require that you have experience working with children. Benefit shall be, if you are not trained kindergarten teacher, recreation supervisor, nurse or teacher. You need to be social, outgoing and interested in children and young people's work. It is also good if you are interested in the creative or sporting duties, such as crafts, painting, football and / or water sports. We assume you are holding high school certificates as well as oral and written fluent in Finnish and Swedish language skills. You speak also fluent English, Other languages are calculated advantage.

5.3.3.1.Germany TUI

Clerk / in Front Office Sales & Customer Support. Responsibilities Settlement of sales and consultations on the phone for tui.com, 1-2, Fly.com, robinson.com and discount-travel.com Handling of inquiries and reservations by e-mail Quotations Cross-selling and up Process management and accounting control Ensuring the quality Support for user questions and posting questions to redirect the client Careful editing of complaints and maintenance of simple complaints talks Requirements Training as a travel clerk Extensive experience in dealing with relevant system applications (especially Amadeus, IRIS.plus, Toma, Inexso, Midoco) Extensive knowledge of MS Office systems Geographic knowledge and sound local knowledge Sales force, communication skills and counseling skills Good knowledge of English Experience, knowledge and joy in dealing with Web-based applications Consistent quality and Servicedenken Enthusiasm and joy in dealing with people Willingness to flexible working hours and adopting weekend shifts
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Benifits ... A modern workplace, and an interesting and versatile use in a motivated team. It is a part-time 20-30 hours / week (50% -75%) for full flexibility. The World of TUI - is made of people. Are you ready to discover this world? The diversity is the wealth of the World of TUI.

5.3.3.1. Germany (Thomas cook)

Job dicription Release of the tourist information on the regulation calculated under examination at specified dates and the release of the correct automatic Kosteneinbuchung and data available to the audit and credit creation for Handling-/Transferkosten and tours Read and interpret contracts target for regulation as well as archiving and organization of the contracts Monitoring and control of operations such as the assessment of contract interpretation for the accuracy of the automatic setting regulation Regular quality control of the calculated and shared travel orders to regulate the basis of predetermined control evaluations Data provision for parts of the department reporting Read and interpret the appropriate department reports and independent control to meet given objectives Clarification of Regulierungsunstimmigkeiten on a contractual basis, data entry and correction of data regulierungsrelevanten Data supply and maintenance of reporting in Excel files or other data tables Communication with hotel and shopping destination management to ensure regulatory Participation in monthly, quarterly, annual work of the Settlement Area Hotel Regular communication with its associated Shared Service Centers in the English language to clarify inconsistencies in the connected part of regulatory process and carried out there Requriements completed commercial training, ideally in the travel and tourism sector Knowledge of accounting Good English language skills Reliable knowledge of MS Office applications (Winword, Excel) Self-employed and responsible way of working Strong ability to complex and process-oriented thinking High operating and service readiness, resilience and self-confident communicative occurrence Willingness to travel Read and interpret UML processes

and

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Advantage Thomas Cook offer an exciting work environment with international contacts, extensive social benefits and new challenges every day.

5.3.3.Emloyee engagement

TUI TUI shared one vision and one set of values across the Group and have developed winning behaviours to support them. They involve their colleagues in business matters that affect them and respond to feedback received through employee surveys, employee forums and as part of the performance review cycle. The performance review cycle gives every colleague the opportunity to meet their line manager at least once annually to discuss their performance and to make plans for development in the coming year. Thomas Cook Thomas Cook places a great deal of importance on internal communications to create universal understanding of the Groups agenda. The Group Chief Executive Officer visits the business segments throughout the year and communicates on a monthly basis to update Group employees on the Companys progress and performance. Regular communications within the segments keep our people up-to-date on the latest business and market developments. In addition, their key markets also host annual conferences to review the previous years performance and set out the priorities for the coming year.

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5.3.4. Personal expenses

We want to compare the expenses of the employees to see how much money the companies spend on their personal expenses. Thomas Cook

TUI Travel

5.4. Conclusion

Since Both TUI and Thomas Cook are international travel company which have a very complex organizational structure. TUI Travel and Thomas Cook have training programs with a wide range of variety, but TUI Travel Trains their employee better. This is because TUI has a more specialized division, and more detailed Training Programs than Thomas Cook Group PLC. However, Thomas Cook gains more on employee job satisfaction compare to TUI. TUI Travel invests more money in their people and the training programs more than Thomas Cook. This makes TUI performs better in managerial aspect, since TUI invests more in their Training Programs, which are more detailed and specific compared to TUI.
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Chapter 6 Key Performance Indicators


6.1 Financial
6.1.1 KPI Rationale

Our group believe that to measure and to compare two companies performance, financial analysis is crucial. With making a benchmark on specific data we can use to compare both companies, and we can see which company is performing better. Financial benchmark only will not be able to judge the overall performance of a company, but financial performance are most important when we are judging how well a company manage their resources.
6.1.2 Performance/Target

To measure TUI Travel PLC and Thomas Cook Group PLC, we have three financial KPIs with 7 PI : Profit Ratios o Gross Profit Margin The gross profit margin simply gives the percentage of sales available to cover general and administrative expenses and other operating costs. o Net Profit Margin This number is an indication of how effective a company is at cost control. The higher the net profit margin is, the more effective the company is at converting revenue into actual profit. o Return on Total Assets82 A measure of how effectively a company uses its assets83. o Return on Stockholders Equity A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income84 Liquidity Ratios o Current Ratio An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is85. o Quick Ratio A measure of a company's liquidity and ability to meet its obligations86. Leverage Ratios o Debt-to-assets ratio

82 83

http://www.investorwords.com/3260/net_profit_margin.html http://www.investorwords.com/5776/ROTA.html 84 http://www.investorwords.com/4315/ROE.html 85 http://www.investorwords.com/1258/current_ratio.html 86 http://www.investorwords.com/4008/quick_ratio.html

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shows the proportion of a company's assets which are financed through


debt. If the ratio is less than one, most of the company's assets are financed through equity. If the ratio is greater than one, most of the company's assets are financed through debt. o Debt-to-equity ratio A measure of a company's financial leverage. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity.
6.1.3 Key Performance Indicators

Profit Ratios o Gross Profit Margin


Gross Profit Margin Year Ended Year Ended 30/09/08 30/09/07 23.19% 23.64% (0.2319) (0.2364) 7.33% 7.02% (0.0733) (0.702)

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 23.65% (0.2365) 8.35% (0.0835)

Year Ended 30/09/06 23.31% (0.2331) Gross Profit Margin

o Net Profit Margin


Net Profit Margin Year Ended Year Ended 30/09/08 30/09/07 2.37% 0.55% -1.94 % 0.08%

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 1.84% 0.89 %

Year Ended 30/09/06 0.17% 0.89 %

o Return on Total Assets87


Return on total Assets Year Ended Year Ended 30/09/08 30/09/07 0.80% 2.90% -2.91% 0.00%

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 0.24% -0.12%

Year Ended 30/09/06 0% -

o Return on Stockholders Equity


Return on stockholder equity Year Ended Year Ended 30/09/08 30/09/07 2.38% 7.80% -10.38% 0.00%

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 0.85% -0.45%

Year Ended 30/09/06 0% -

Liquidity Ratios o Current Ratio

87

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Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 0.40 0.56

Current Ratio Year Ended Year Ended 30/09/08 30/09/07 0.55 0.62 0.71 0.85

Year Ended 30/09/06 0.57 -

o Quick Ratio
Quick Ratio Year Ended Year Ended 30/09/08 30/09/07 0.55 0.61 0.70 0.84

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 0.40 0.55

Year Ended 30/09/06 0.56 -

Leverage Ratios o Debt-to-assets ratio


Debt-to-assets Ratio Year Ended Year Ended 30/09/08 30/09/07 17.68 11.29 13.88 23.16

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 18.46 12.62

Year Ended 30/09/06 12.78 -

o Debt-to-equity ratio
Debt-to-equity Ratio Year Ended Year Ended 30/09/08 30/09/07 59.25 29.47 48.88 83.71

Thomas Cook Group PLC TUI Travel PLC

Year Ended 30/09/09 71.74 49.41

Year Ended 30/09/06 35.67 -

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6.2 Marketing
6.2.1 KPI Rationale Our Team believed that through marketing benchmarking we can see who is a better player in presenting their product. Who is better on delivering the value to the customers, which Company scores more customer satisfaction. We do the Marketing benchmarking also in order to see who is the leading player, Who have the best SWOT for the Tourism Business 6.2.2 Performance / Target To measure TUI Travel PLC and Thomas Cook Group PLC, we have seven marketing KPIs with 5 PI : Mission Statement A Mission Statement of the organizations purpose what it wants to accomplish in the larger environment88. SWOT Analysis SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective 89. Strategic Objective The companys statement needs to be turned into the Strategic Objectives, which include business objective and marketing objective to guide management. Market Position o Market Dynamics UK & Ireland o Market Dynamics Continental Europe o Market Dynamic Northern Europe o Market Dynamics North America o Market Dynamics Germany BCG MATRIX The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the

88 89

TUI Travel Annual Report 2009 http://en.wikipedia.org/wiki/SWOT_analysis

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faster the product's market grows the better it is for the company90. Supply Chain

The network of retailers, distributors, transporters, storage facilities


and suppliers that participate in the sale, delivery and production of a particular product91. Distribution Channels Cross Channel Marketing E-Commerce

6.2.3 Marketing Key Performance Indicators


6.2.3.1 Mission Statement
Thomas Cook Group PLC : Under the global vision WE GO FURTHER TO MAKE DREAMS

COME TRUE, Thomas Cook states itself with four different missions based on five main divisions: UK & Ireland, Continental Europe and Airlines Germany, Northern Europe, North America. The differences in the Thomas Cook s Mission Statements in different divisions are related on its flexible business models and concentrated marketing strategy for every different geography market. TUI Travel PLC : TUI Travel PLC does not have a Mission Statement. We have a stated strategy which is to create superior shareholder value by being the worlds leading leisure travel group providing customers with a wide choice of differentiated and flexible travel experiences to meet their changing needs To enable us to achieve this goal we have identified four key strategic imperatives which are linked to our KPIs.92

6.2.3.2 SWOT Analysis TUI Travel plc Strengths


Market leader tourism industry. in the

Thomas Cook
Scale (22m passengers out of 21 source markets).

90

valuebasedmanagement. Retrieved 2010, from http://www.valuebasedmanagement.net/ http://www.investorwords.com/4823/supply_chain.html FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs

91 92

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Be a part of TUI AG, an international cooperation, which is operating business in Travel, Hotels and Resorts, Cruises, and major share holder in Container shipping (43.33% holding in Hapag-Lloyd). Unique media methods in marketing (TUI song: Lets make people smile). Strong multi-channels distribution focusing on online sales. Delivering high quality customers services. Stable and managementfriendly shareholders.

Portfolio of strong brands

Speed of decision making and implementation Industry leading margins

Tailored business model in each market Strong multi-channel distribution capability Asset light model improving

Strong and financial position

Positive customer feedback: 97% customer satisfaction; 96% would recommend TCNE. Unique concept hotels.

No1 market share of Canaries, Majorca, Turkey, Egypt and Rhodes. 25years average industry experience. Strong partnerships. customer

Weakness

Company registered a net loss of EUR 142 million in 2008 (Annual Report 2008) Major reduction in the volume of holiday packages because of recession and financial uncertainties Heavy Fixed Assets lead to the lack of flexibility and reduce the competition ability when the economic climate has high level of uncertainty. (Fixed assets cover 34% of total assets)

Has no retention policy.

Has little or no scope outside of Europe. Lack of service, flexibility and business focus (such as frequent flyer programmes) make the low-cost model unappealing for most business travelers. The two drivers of growth, the focus on price and
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Maintaining too many different brand names makes the companys marketing and management expenses become too high.

the focus on convenience (frequent flights, few connections, more nearby airports) are reaching their natural limits. Differentiation from there remains to be difficult. Easy Jets own success makes it difficult to recruit and train staff quickly enough

Opportunities

Expansion in developing markets such as India and China. Business expansion through further acquisition and mergers. Recovery signs of the world economic after economic recession.

Experts predict great potential for future growth in the next years. The current recession is favorable as people and businesses are more costconscious. More full-service airlines may withdraw from the regional market to focus on more profitable long-haul routes leaving the market to the low-cost operators.

Threats

Changing consumer behavior in his global economic recession can influence companys strategy. Threat of losing consumers who want a low-cost packagers because companys focus on luxury hotels. Competitors, such as Thomas Cook, are more flexible in business models and strategies.

Competition is likely to intensify, given the saturated market and the shortage of other options. Increased competition is likely to lead to greater difficulties in demanding incentives from communities. Companies cut on business travel in times of economic downturn and because of new timeconsuming security measures travel substitutes like videoconferencing are introduced.

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6.2.3.3 Strategic Objective


Thomas Cook Group PLC :STRENGTHENING OUR BUSINESS AND INVESTING FOR GROWTH : Creating superior shareholder value by being the worlds leading leisure travel group providing customers with the widest choice of differentiated and flexible travel experiences to meet their changing needs.

TUI Travel PLC

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6.2.4 Market Position


6.2.4.1 Market Dynamics UK & Ireland TUI Travel plc
Passengers93 5.687m

Thomas Cook
7.6m (Including UK, Ireland, Middle East, and India)

Controlled distribution94 Market position

2009 78%

2008 75%

2009 68.6%

2008 67.4%

Mainsteam sector: #1 (34% market Mainsteam sector: #2 share)95 Financial services (Foreign Exchange market): #4 (7% market share) Financial services (Foreign Exchange market): #3 (15% market share) Target further mainstream margin improvement through product and haul mix. Develop our e-commerce strategy and move into the online travel agency market. Continue to grow travelrelated financial services, notably foreign exchange. Build on our strong performance in key medium haul destinations outside the Eurozone.

Strategy

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Key Brands

93 94 95

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6.2.4.2 Market Dynamics Continental Europe TUI Travel plc


Passengers96 9.73m (Including Germany) Controlled 2009 97 distribution 46% Strategy

Thomas Cook
7m 2009 38.3% 2008 37.7%

2008 40%

Expanding the tour operator business in growth markets like Russia and Ukraine. Expanding the market share in the German-speaking volume market for cruises. Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Increase sales of exclusive and differentiated product to maintain margin advantage. Continue to grow online distribution channels and improve dynamic packaging capabilities. Increase sales to medium haul destinations such as Turkey and North Africa.

Key Brands

96 97

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6.2.4.3 Market Dynamic Northern Europe: TUI Travel plc


Passengers98 5.687m Controlled 2009 99 distribution 85% Strategy

Thomas Cook
1.5m 2009 82.7% 2008 79.4%

2008 79%

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Further expand internet sales. Increase the proportion of customers who book our exclusive, concept hotels. Continue to build on the success of our world class, inflight sales. Consolidate our position in the major Nordic outbound destinations of Spain, Greece, Cyprus, Turkey and Thailand.

Key Brands

98 99

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6.2.4.4 Market Dynamics North America TUI Travel plc


Passengers
100

Thomas Cook
1.1m 2009 14.1% 2008 15.7%

Controlled distribution
101

0.54m (Including Mainstream and Specialists and Activity sectors) 2009 2008

Strategy

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.

Pursue flight and accommodation cost savings and strengthen hotel exclusivities. Grow independent travel through dynamic packaging technology and improved product line. Strengthen controlled distribution, especially online. Grow newly launched Financial Services division and expand product range.

Key Brands

100 101

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6.2.4.5 Market Dynamics Germany TUI Travel plc


Passengers
102

Thomas Cook
5.9m 34

Number of aircraft Retail Estate Product Focus

8.775 million (Including Mainstream and Specialists and Activity sectors) 48


Own shop: 428 Franchise: 974 Strong focus on mainstream Highest brand equity in the Market

Controlled distribution
103

2009 46%

2008 40%

Ownshop: 166 Franchise: 395 Strong focus on mainstream market Well positioned with Neckermann brand in lower/ budget segment. 2008 2009

Strategy

Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management. Expanding the market share in the German-speaking volume market for cruises.

Focus on cost-saving, especially fuel related efficiencies. Drive synergies and other benefits through greater co-ordination of activities with other Thomas Cook Group airlines. Enhance benefits from cooperation with other external airlines.

Key Brands

102 103

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6.2.5 BCG MATRIX TUI Travel plc


Star Activity Sector Specialist & Emerging Extra services (renting car) Package holiday Independent holiday (city breaks), Financial services (foreign currencies services and Money card, Travel insurances) Accommodation and Destination (organising meetings, incentives, conferences and events (MICE)) Hotels, resorts Airlines. Cruisers

Thomas Cook
Component holiday, Extra (car hire), Activity Sector. Accommodation Package holidays Specialist Financial services related to travel

Cash Cows

Question Marks Dogs

Hotels Airlines Cruisers

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6.2.6 Distribution Channels TUI


Travel Agencies Own retail shops Franchises Third- party distributions Ecommerce

Thomas Cook
Own Travel agencies Franchises Third- party distributions

All most every brands have the Thomascook.com: Each country brand website for customers to has one website for online book services online booking. http://www.firstchoice.co.uk/ http://www.thomascook.com/ http://www.thomson.co.uk/ http://www.thomascook.de/ http://www.arke.nl/wintersport.aspx http://www.thomascook.pl/ http://www.tuifly.com/de/ http://www.thomascook.fr/ http://www.neckermann-reisen.de/

Telephone Selling

Call Centers

Call Centers

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6.3 Management Key Performance Indicators 6.3.1 KPI Rationale


In order to determine TUI Travel PLC or Thomas Cook Group PLC is better, we have to make a benchmark on their Human Resources. Since management are about the people of the company and how they work and communicate with each other, we believe that the management is the most essential part from a company. Since both TUI Travel PLC and Thomas Cook Group PLC is an International Tourism Company, both of them has hundreds of brands and but has specific needs of each brands, and specialization in each department, who trains their employees better, that is what we are going to benchmark in this management key performance indicator. 6.3.2 Performance/Target Company profile o Mission Statement o Vision and Mission o Sustainability Development and Social Responsibility Company Organization o Organizational Structures o Departmentalization Human Resources Management o Recruitment Plan o Selection

6.3.3 Performance/Target 6.3.3.1Company profile 6.3.3.1.1Mission Statement Thomas Cook Group PLC: Under the global vision WE GO FURTHER TO MAKE DREAMS

COME TRUE, Thomas Cook states itself with four different missions based on five main divisions: UK & Ireland, Continental Europe and Airlines Germany, Northern Europe, North America. The differences in the Thomas Cook s Mission Statements in different divisions are related on its flexible business models and concentrated marketing strategy for every different geography market.

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TUI Travel PLC

: TUI Travel PLC does not have a Mission Statement. We have a

stated strategy which is to create superior shareholder value by being the worlds leading leisure travel group providing customers with a wide choice of differentiated and flexible travel experiences to meet their changing needs To enable us to achieve this goal we have identified four key strategic imperatives which are linked to our KPIs.104
6.3.3.1.2 Vision and Mission

TUI Travel plc Their common vision and values unite their across the Group and they call this their TUI Spirit. Their vision is Making Travel Experiences Special and their four values are: Responsible leadership Customer obsessed Value driven Playing to win Winning behaviours have been developed to help embed these values in every day working life in a number of ways. These behaviours allow them to truly engage in their work and optimize their performance as individuals and as a business. Thomas Cook

These values are the focus for ensuring that every Thomas Cook employee embraces what they stand for and are PROUD to work with us delivering customer service thats second to none.
6.3.3.1.3 Sustainability Development

TUI Travel Throughout the year, sustainable development has continued to be an important part of the business agenda for TUI Travel. They aspire to lead in sustainable development within the leisure travel industry. In the long term, they believe this goal will help build shareholder value for TUI Travel and contribute to operating a strong business now and in the future.

104

FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs

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TUI Travel is listed on the FTSE4Good Index in recognition of its transparency and for meeting strict social, environmental and governance standards. It is the highest placed travel company, at 16, in the 2008 Good Companies Guide The Observers annual ethical ranking of FTSE350 companies. TUI Travels first full Sustainable Development Report was published in July 2009, with independent verification of their targets by Bureau Veritas. For the second consecutive year, they have been included in the Carbon Disclosure Leadership Index, which highlights the top 10% of FTSE350 companies that have displayed the most professional approach to climate change disclosure. Sustainable development strategy of TUI Travel Plc During 2008/2009, they developed a Group sustainable development policy in conjunction with key colleagues, articulating their vision and approach to sustainable development. The Group Code of Conduct covers a wide range of sustainability issues, including human rights, business ethics and transparency and commits TUI Travel to upholding the principles of the UN Global Compact. TUI Travels sustainable development strategy is based on consideration of the key issues affecting the Company, now and in the future. It has been developed in consultation with internal and external stakeholders. They encourage all TUI Travel businesses to develop their own sustainable development strategy, aligning with Group priorities. At the end of 2008/2009, 73% of TUI Travel businesses had their own sustainable development strategy. Policy and mitigation for Groupwide risks relating to sustainability are facilitated by the Group Risk Management and Sustainable Development Departments, with responsibility for managing such risks also shared by the businesses themselves. Thomas Cook plc The last year has proved a testing time for all areas of business, not least the travel industry. The global economic downturn brought with it a decline in international tourism in 2009, intensified by many other factors including consumer confidence, terrorism incidents, fluctuating exchange rates and the outbreak of swine flu. At Thomas Cook Group, their response to challenging market conditions is to work harder and go further to make dreams come true for their customers. They recognize the many virtues of travel, the positive cultural exchange and the boost to local economies, but they are also aware of the potential impact on the environment, societies and local cultures. The travel and tourism industry has a responsibility to operate in a sustainable way and Thomas Cook, which founded its business with clear social and educational intentions, is proactive in this area. They aim to have sustainability at the core of their business and feature it as an integral part of their strategy, particularly when it comes to the environment. These responsibilities no longer sit on the periphery; their importance represents a genuine business risk. Society, customers, investors, governments and communities no longer look for, but demand that both
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time and money be invested in the preservation and protection of the incredible people and places they come into contact with. Over 160 years ago a former preacher, Thomas Cook, devised the first package holiday. Since then, the business he founded has helped millions of people to relax, unwind and broaden their horizons. Thomas Cook didnt just want people to have fun. He believed affordable travel could change working peoples lives for the better. His company was inspired by a strong sense of social justice and moral responsibility: what today they call corporate social responsibility (CSR). Today, theyre still inspired by their founders values. They believe they make a world of difference not only to their customers, but to all the people whose lives they touch. Their mission is to perfect the personal leisure experience. And that includes managing their activities in a morally and socially responsible manner.

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6.3.3.2Company Organisation 6.3.3.2.1 Organizational Structures

TUI Travel plc Organizational structures TUI Travel plc Organizational structures chart:

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6.3.3.2.1 Departmentalization

TUI is using Geographical Departmentalization, which means groups jobs according to Geographical Region.

Advantages and disadvantages of Geographical Departmentalization105 Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geography market better Disadvantages Duplication of functions Can feel isolated from organization areas

other

Thomas Cook Organizational structures Thomas Cook has a more flexible organization structure, which is combined by Geographical Departmentalization and Functional Departmentalization (Groups Jobs according to function).

Advantages and disadvantages of Geographical Departmentalization106 Advantages More effectives from putting together people with common skills, knowledge, and orientations. Coordination with function areas In depth specialization. Disadvantages Poor communication across functional areas Limited view of organizationalngoals

105 106

Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc. Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc.

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6.3.3.2.2 Recruitment Plan

TUI Travel plc

Apprenticeship programme Content and delivery TUI Horizons107 Recruiting for their long term success108 Thomas Cook

The recruitment process onto STARS is rigorous and the required standard must be reached. Staff are expected to complete a range of tasks which have direct links to the company PROUD values. The tasks can be small (such as controlling the airport) or large (like organising a fund raising event in resort). Staff are expected to achieve a pass grade for each task and only when they have achieved the pass grade for all tasks set will they have passed the STARS in resort stage. A key benefit of STARS is that it assists with succession planning, enabling suitable employees to be identified and trained for the next level. This in turn can help ensure staff are retained and promoted from within the business.
107

). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 108 ). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/

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Chapter 7. References
1. (2010). IBMS Course Guide. Deventer, The Netherlands: Saxion University of Applied Sciences. 2. 2.Kotler, Armstrong, Wong and Saunders (2008). Principles of Marketing. (5th European edition .). Prientice Hall. 3. Saunders, Lewis and Thotnhill (2009). Research Methods for Business Students. (5 th ed.). Prientice 4. Berenson, M. L., Levine, D. M., & Krehbiel, T. C. (2006). Basic Business Statistic. (tenth ed.). New Jersey: Pearson Education, Inc. 5. Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education,Inc. 6. Gowthorpe, C. (2005). BUSINESS ACCOUNTING AND FINANCE. (2nd ed.). Italy: Thomson. 7. (2009). PrelimannouncementThomasCook. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 8. (2009). annual report Thomas Cook 2008-4. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 9. (2009). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 10. (2009). AnnualReportand TUI Accounts08. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/

11. valuebasedmanagement. Retrieved February 2010, from http://www.valuebasedmanagement.net/ 12. THE ROLE OF FINANCIAL ANALYSIS. Cengage Learning. Retrieved February 06, 2010, from http://college.cengage.com/business/resources/casestudies/students/financial.htm.

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13. Industry Profiles: Travel Agencies and Services Travel Agencies and Services. First Research. Retrieved February 06, 2010, from http://www.firstresearch.com/IndustryResearch/Travel-Agencies-and-Services.html
14. http://www.etoa.org/Directory.aspx 15. http://en.wikipedia.org/wiki/Tourism 16. http://www.cbi.eu/?pag=84&doc=3116 17. http://www.wikitravel.org 18. http://www.wikitravel.org

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FINANCIAL APPENDICES

Thomas Cook 2009

Thomas Cook 2008 Property, Plant & Equipment


Thomas Cook 2007 Aircraft and Aircraft Spares Cost At 1 November 2005 Additions Exchange differences Disposals Disposal of subsidiary undertakings Transfer to non-current assets held for sale At 31 October 2006 Additions Acquisitions (note 18) MyTravel other Exchange differences Transfer from non-current assets held for sale Reclassifi cation Disposals At 31 October 2007 1091.18772 3.77622 0.34965 -16.43355 1,078.88 4.40559 203.77602 -8.25174 -27.76221 1,251.05 243.91584 0.76923 0.27972 -6.993 -83.35656 -22.93704 131.67819 2.30769 54.26568 -0.48951 0.48951 -0.34965 187.90191 121.46841 6.15384 0.76923 -5.03496 -6.08391 117.27261 5.94405 14.26572 -3.28671 2.37762 -0.06993 -0.34965 130.7691 187.69212 12.51747 0.41958 -4.61538 -31.95801 -10.55943 153.49635 12.72726 38.67129 0.06993 -3.35664 5.38461 -0.41958 -3.28671 203.28651 553.07637 19.44054 1.46853 -16.64334 -121.39848 -47.9 402.44715 20.979 107.20269 0.06993 -7.13286 7.76223 -9.37062 521.95752 Freehold Land and Buildings Short Leaseholds Other Fixed Assets Total

Page | 144

EUR/GBP 31 October 2007

0.6993

Thomas Cook 2007 Converted to Poundsterling TUI Travel PLC 2008

Page | 145

TUI Travel PLC 2009

Page | 146

Appendices 2.2 Acquisitions Thomas Cook Group PLC 2008

Acquisitions TUI Travel PLC 2008

Page | 147

Appendices 2.3 TUI Current Asset 2008

TUI Cash & Cash Equivalent 2008

TUI Assets Classifieds as held for sale 2008

TUI Current Trade and other payables 2008

Page | 148

Thomas Cook Current asset 2007

Thomas Cook Cash and Cash Equivalent 2007

Thomas Cook Trade and Other Payables 2007

Page | 149

Thomas Cook Current Asset 2008

Thomas Cook Liabilities 2008

Thomas Cook Derivative Financial Instrument

Thomas Cooks 2008 Trade and Other Receivables

Page | 150

Thomas Cook Current Asset 2009

Thomas Cook Current Liabilities 2009

Thomas Cook Financial Derivative 2009

Thomas Cook Borrowings 2009

Page | 151

TUI Travel PLC Current Asset 2009

TUI Travel PLC Current Liabilities 2009

TUI Travel PLC Cash & Cash Equivalent

TUI Travel PLC Asset Classified as held for sale

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Appendixes 3

Page | 153

Project Organizational Analysis

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Table of Contents

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Introduction.................................................................................................... Objective of the assignment........................................................................ Central research question............................................................................ Sub questions............................................................................................... Procedures and methods............................................................................. Project organisation..................................................................................... Quality control............................................................................................... Time Planning................................................................................................ Preconditions................................................................................................ Literature....................................................................................................... Cooperation Agreement Group 7................................................................ Declaration of approval................................................................................ Feedback Form Milestones.........................................................................

3 4 5 6 7 8 9 10 14 15 17 20 22

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1. Introduction
For the coming the second periods, we are going to set up a bench mark. It is based on benchmarking Key Performance Indicators (KPIs) of the two representative firms of the travel industry, TUI and Thomas Cook. As a group of 5 international IBMS students we are going to analyze and find out the best way about the objective. In the first period of the project we will hand in a report in which about our project. In addition to this, we will clear every trend and development with current and factual data. Next to this, we will make interviews to improve our project. In the second period, we will analyze information which we have collected. We will focus on several separate aspects: Project organization, Quality control, marketing and Accounting. The aim is to find information necessary to make our first report complete and to find more information about the several aspects mentioned above. For deeper insights, we are going to do desk research with one in-depth interview. Further we will use the knowledge of last, and the books of this school year. Most of the information will be secondary data, but we will also look for primary data like scientific articles and annual reports.

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2. Objective of the project Organizational analysis:

Set up a bench mark based on quick scans of two representative firms of the travel industry, TUI and Thomas Cook by identifying and comparing the Key Performance Indicators of the firms in order to find out who is best in class.

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3. Central Research Question:


Among TUI and Thomas Cook, which travel firm is better in business process and performance according to benchmarking the Key Performance Indicators?

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4. Sub Question:
Travel Industry Analysis What is travel industry? How does the travel industry produce value and profit? What is the Business model of travel firms in European market? How much profit dose the whole travel industries generate? How is the Tourism market divided? What are the roles of TUI and Thomas Cook in European travel industry?

Case Financial Analysis What are the financial position of TUI and Thomas Cook? In order to determine their financial positions, which are their financial performance ratios should be based on? How are the profit ratios of TUI and Thomas Cook? How are the liquidity ratios of TUI and Thomas Cook? How are the activity ratios of TUI and Thomas Cook? How are the leverage ratios of TUI and Thomas Cook? How are the shareholder-return ratios of the two firms? What are the financial forecasts of TUI and Thomas Cook?

Case Management & Organisation Analysis What are the structure of TUI and Thomas Cooks Organisations? How do they manage their human resources? What are personnel training programs in the two firms? What do TUI and Thomas Cook do to control their service quality? How do they develop their management strategies?

Case Marketing Analysis What are the marketing models of TUI and Thomas Cook? What are their marketing objectives? What are the target market of TUI and Thomas Cook? How do they position and segment their target markets? How are their marketing performances? How they promote their products? Who are their competitors? In order to compete, which is their pricing strategy? Which strategies TUI and Thomas Cook apply to improve their marketing performances?
Page | 159

Case E-commerce UPS What is e-commerce? Which are common applications related to e-commerce activities of TUI and Thomas Cook? How much profit do e-commerce activities create for the two firms? Key Performance Indicators What are the Key Performance Indicators? Which parts of the firms need to look at in order to identify their Key Performance Indicators? What are the Key Performance Indicators to compare TUI and Thomas Cooks? What are the similarities between TUI and Thomas Cook? What are the differences between the two travel firms regarding to business domains? Which firm is scored better about Key Performance Indicators?

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5. Procedures, methods
In this project our task is to set up a bench mark based on quick scans of two representative firms of the travel industry to find out who is the best in class, depending on this objective, we will get our information through internet, newspaper and magazines. Due to primary data is costly and difficult to gain access, so most of our source will be secondary data. According to our research questions and objectives, we decide to conduct different types of research methods in different phrases. In the first phrase, we will collect data on each aspect of these two companies and then make objective conclusions about the current condition. It is descriptive research we are going to apply in this stage. In the second phrase, the explorative methods play the dominant role in analyzing the interpreting the data. Because we need to explore the reason why we think the chosen company is better than the other one. In addition, interviews are needed to gain more reliable and valid data. And we will negotiate with organizations in a proper way; carefully design our individual questions on questionnaires.

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6. Project organization
We have 4 nationalities in our group, namely Indonesia, Vietnam, Iraq and Rumania. So according to different strong point of each other, after discussion, we divide our task as this frame: Ivander is good at organizing and creative thinking, so he will be the people who make an overall plan for us. Duong will take care of the layout of each deliverables. Mo and Dan will in charge of examining quality of group work. And Gework will do the job of summaries our weekly questions before our supervision time.

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7. Quality control
We have reached an agreement that high quality of our deliverables is the most important part of our performance. In case of misunderstandings which are caused by incorrect grammar and spellings, an effective way of quality control has been made. First, after we finish our assigned parts, the special spelling check system in WORD will be used to help with grammar. Then we put up our parts on the public igoogle account, everyone in our group can comment others work by direct edit. After that, Ivander and Duong will check all of the work and set a final version of deliverable. We are going to do our best to make our performance without grammar, spelling as well as logical mistakes.

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8. Time Planning
Week

Deliverables are in bold below Milestone 1: Plan of Action Making groups, preparation cooperation agreement. Mind mapping and pre-research

Activities

Person in charge

Time

Group Deadli ne

Deliverables final deadlines

3.1

Group meeting

01.02 03.02 05.02

3.2

Cooperation Agreements Introduction Time Planning Preconditions Declaration Procedures Project Organization Quality Control Objective of the assignment Central research question Sub question Literature Group Meeting About Milestone2 Making a plan and divide tasks to search data about Travel Industry Profile

06.02at 12AM

Meeting with Supervisor Meeting with our supervisor (Mr. Tartarin) every Friday afternoon to discuss about the milestones and project group process.

Comment

Discuss questions

All group member s

08.02 12.02
Hand in Milestone 1 on 08.02. at 5 PM

Dispense personal working

Travel industry overview Development trends Challenges Financial information Industry forecasts Questions about milestone2

13.02 at 12 AM

3.3

Milestone 2 Travel Industry analysis

Group Meeting + Questions Analyzing the collected data to

All Group member s All group member s

15.02 17.02 19.02 20.02 at 12 Page | 164

Dispense personal working

make Travel Industry Profile Questions about milestone2 3.4 Group Meeting + Questions

AM

3.5

Milestone 3. Case Financial analysis

Spring Holiday Break All 22.02 27.02 Group 24.02 at 12 member 26.02 AM s Making a plan and divide tasks about milestone3 Search for financial performances of 2 firms Group Meeting + All 01.03 06.03 Questions group at 12 member AM s Analyzing the collected data about Financial information. Profit ratio liquidity ratios activity ratios

Hand in Milestone 2 on 01.03 at 5 PM

Meeting with our supervisor every Friday afternoon to discuss about the milestones and project group process.

Dispense personal working

Dispense personal working

leverage ratios shareholder-return ratios Group Meeting + questions about Milestone4 Making a plan and divide tasks Collecting data about Management and Organization performances of 2 firms Group Meeting + questions

3.6

All group member s

08.03 10.03 12.03

Hand in Milestone 3 on 08.03 at 5 PM

Dispense personal working

13.03 at 12 AM

3.7

Milestone 4 Case: Management & Organization

3.83.9

Analyzing the 18.03 collected data at 12 about Management AM and Organization performances of 2 firms Study week/ retake exams period 2 Exam period Page | 165

All group member s

15.03 17.03 19.03

Dispense personal working

4.1

4.2

Milestone 5: Case Marketing

Group Meeting + questions about Milestone5 Making a plan and divide tasks Collecting data about Marketing performances and strategies of TUI and Thomas Cook Group Meeting + questions Analyzing the collected data about Marketing performances and strategies of TUI and Thomas Cook Group Meeting + questions about Milestone6

All group member s

05.04 07.04 09.04

Hand in Milestone 4 on 05.04 at 5 PM

10.04 at 12 AM

All group member s

12.04 14.04 16.04 17.04 at 12 AM

4.3

All group member s

19.04 21.04 23.04

Hand in Milestone 5 on 19.04 at 5 PM

4.4

Milestone 6: Case Ecommerce UPS

Making a plan and divide tasks Collecting data about Case Ecommerce UPS Analyzing the collected data about Case Ecommerce UPS May holiday Break Group Meeting + All questions about group Milestone 6 and 7 member s Making a plan and divide tasks about milestone7
Collecting data about Key Performance Indicators

24.04 at 12 PM

26.04 28.04 30.04 01.05 at 12 PM

Hand in Milestone 6 on 03.05 at 5 PM

4.5

Milestone 7: Key Performance Indicators

4.64.7

Writing the Benchmark report

Group Meeting + questions about Milestone7 Analyzing the collected data about KPI of 2 firms Group Meeting + questions about the Benchmark report Making a plan and

All group member s

03.05 05.05 07.05 05.05 at 12 AM 10.05 12.05 15.05 17.05

Hand in Milestone 7 on 07.05 at 1 PM

All group member s

Hand in Report Benchmark travel industry on Thursday 12

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4.8

Study week en retake Period 3

divide tasks about the Benchmark report Writing the Benchmark report Checking the report draft Checking and printing out final report Group meeting to divide tasks about Presentation. Prepare the slides Presenters

19.05 21.05 20.05 at 12 AM 21.05

PM

4.9

Exam period Peer evaluation

4.10

Exam week Retake project report (when/if necessary) Retake oral defense (if necessary)

Presentation Benchmark Travel Industry Oral defense + Peer evaluation Retake project report Retake oral defense

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9. Precondition:
There are several possible limitations may emerge during the project, and only stick to the time planning and finish our report on time are not enough to make our project perfect. We only have 20 weeks to make a complete and high-quality report. Since we are all the new student of IBMS, so we are lack of practical experience about management and organisation, we need ask advices from our project supervisors and teachers in order to accomplish our project objective.

First of all, we are working in a group within three different nationalities. It is very important to communicate with each other in a proper way and keep our group moving on.

Secondly, in the second phrase, before the interview conduct in the real context, we have to design a questionnaire in a logical layout, which is very difficult to achieve. After discussion, we regard pilot test a best way out.

In addition, our group members should not be shy to present their ideas. We can only improve ourselves by exchanging ideas with each other.

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10. Literature
1. (2010). IBMS Course Guide. Deventer, The Netherlands: Saxion University of Applied Sciences. 1. 2.Kotler, Armstrong, Wong and Saunders (2008). Principles of Marketing. (5th European edition .). Prientice Hall. 2. Saunders, Lewis and Thotnhill (2009). Research Methods for Business Students. (5 th ed.). Prientice 3. Berenson, M. L., Levine, D. M., & Krehbiel, T. C. (2006). Basic Business Statistic. (tenth ed.). New Jersey: Pearson Education, Inc. 4. Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education,Inc. 5. Gowthorpe, C. (2005). BUSINESS ACCOUNTING AND FINANCE. (2nd ed.). Italy: Thomson. 6. (2009). PrelimannouncementThomasCook. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 7. (2009). annual report Thomas Cook 2008-4. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 8. (2009). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 9. (2009). AnnualReportand TUI Accounts08. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/

10. valuebasedmanagement. Retrieved February 2010, from http://www.valuebasedmanagement.net/

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11. THE ROLE OF FINANCIAL ANALYSIS. Cengage Learning. Retrieved February 06, 2010, from http://college.cengage.com/business/resources/casestudies/students/financial.htm. 12. Industry Profiles: Travel Agencies and Services Travel Agencies and Services. First Research. Retrieved February 06, 2010, from http://www.firstresearch.com/IndustryResearch/Travel-Agencies-and-Services.html

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Cooperation Agreement Group 6 (Period 4)

Contact information: Names (Student Number) Class Telephone numbers E-mail addresses

6. Name: Pham ThuyDuong,(2430318) Class: DIM1VC Email: phamthuyduong206@gmail.com Telephone: 0684103949

7. Name: Ivander Laurentius Atmojo (2430243) Class: DIM1VA Email: ivander_atmojo@ymail.com Telephone: 0681103403

8. Name: Corhana Dan Andrei (2430403) Class: DIM1VA Email: omu82005@yahoo.com Telephone: 0634456259

9. Name: Gework Petrosjan (2431488) Class: DIM1VB Email: gework_carnal@hotmail.com Telephone: 0634456259

10. Name: Mohammed Ababakar (2431451) Class: DIM1VB Email: irak_mo@hotmail.com Telephone: 0614575660

Foundation for cooperation and basic rules

- Have a sense of responsibility for our project work - Attend all meetings
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- Be on time for meetings, or notice your absence - The language that will be spoken is English - Follow the planning as discussed and stick to it - Show initiative and be open for ideas - Be polite to each other

Rules of presence and absence. Part of these rules is about the way in which the group members address one another in the case of failures.

- Have 2 official group meetings per week. - Be on time for each meeting (if you cannot come, please contact other members before at least 2 hours in advance, or you will be get a warning, and 2 warning means that you are kicked out) - Each group member will be assigned as chairman once. So always be prepared to be a chairman, send the agenda one day before the meeting.

Rules of participation

- The whole group is equal so everyone has to show their best and to work as a team - Everybody agrees on taking each other seriously and help each.

Rules of reporting

- Upload your task on our public igoogle account - Everyone is going to use the same layout which is Times New Roman 12 - Always use the British Spell Check before sending your work - Our deadline for each week will be 12:00 am on Saturday! - The work of any member will be checked by the other group members and improved if necessary

Agreements as to how to interact with one another

The language that will be spoken is English

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Everyone should give his own opinion Act as a group (teamwork!!!)

- If there are any problems or worries just talk about it so it wont stay in the way of our work

Intercultural

Show respect to each others culture and be aware of cultural difference Always communicate each other in English but not your mother tongue Try your best to achieve cultural synergy

I agree with all the group rules and targets in this agreement and I will do my best to achieve a better result.

Pham Thuy Duong

Ivander Laurentius Atmojo

Corhana Dan Andrei

Gework Petrosjan

Mohammed Ababakar

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Declaration of approval 11. Name: Pham Thuy Duong,(2430318) Class: DIM1VC 12. Name: Ivander Laurentius Atmojo (2430243) Class: DIM1VA 13. Name: Corhana Dan Andrei (2430403) Class: DIM1VA 14. Name: Gework Petrosjan (2431488) Class: DIM1VB 15. Name: Mohammed Ababakar (2431451) Class: DIM1VB

Hereby declare that: 1. The Report is our own work and no authors rights/copyrights have been violated.

2. All sources (inclusive Internet/WebPages) used have been mentioned source indications as footnotes. 3. The following work does not contain more than 5% work of other people or sources. Place: Deventer, the Netherlands Date: Signatures

Pham Thuy Duong

Ivander Laurentius Atmojo

Corhana Dan Andrei

Gework Petrosjan

Mohammed Ababakar

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