A PESTLE Analysis for a Hospitality or Tourism Organization - Essay Example

The external macro-environment about Simply Travel includes the factors related to Political, Economic, Social, Technological, Environmental, and Legal. PESTEL analysis of Simply Travel has been briefly mentioned below.

• Political Factors

It can be noticed that the political environment of England is rather stable. Despite that, governmental regulations and taxation policies regarding the increment of oil prices have influenced the purchasing power of individuals. Other political factors which can affect the business of Simply Travel include proposals evolving for taxes on aviation fuel as well as Value Added Tax on air tickets.

Economic Factors

In 2004, the inflation rate in the U.K fell to 1.3% which is a good sign for the economy of the country. Economic Factors include low inflation rate and low unemployment rate. Individuals have high job security and this factor induces their spending.     

• Social Factors

In past few years, lifestyles changes have been observed among the citizens of the U.K. Improved lifestyle changes also encourage the travel behavior of individuals.

• Technological Factors

Advancements in technological innovations have been occurring in the market of the U.K. Trend of buying through the internet has been vastly observed. People book their tickets and holidays through the internet. Due to this factor, Simply Travel has the new opportunity of making customers through online marketing.

• Environmental Factors

For tourism companies, environmental issues count a lot. The companies need to comply with rules and regulations for preserving the environment.

• Legal Factors

As far as the traveling industry is concerned, the only legal issue is taxes. Taxes on tickets and fuel aviation are growing concerns for traveling companies operating in the U.K.

Drivers for Change

For Simply travel, the key drivers for change include:

• Growth of the industry
• Targeting a particular segment
• Improving the attractiveness of own packages
• Understanding the demands of tourists and customers
• Convincing the customers for a repeat visit
• Building referrals (Business Consulting, 2008)

The above-mentioned tactics can bring a heft amount of progress and change in the business of Simply Travel

1. What is the difference between resources and competencies? Discuss how strategic capabilities contribute to competitive advantage.

Resource

Resources are defined as all the available production or economic factors that help in undertaking or accomplishing the desired outcomes of an organization. The most basic resources which are utilized for conducting business operations include land, labor, and capital. Other types of resources that are used to facilitate business operations include energy, management, time, expertise, entrepreneurship, and information (Investopedia, n.d.).

Competencies

Competencies are defined as the ability of the firm to perform an activity better than its other activities. A competency generally resides in the human resource or activities of the firm and not in terms of physical assets. Competency is further categorized into two components, they include:

1. Core Competency

Core competency is the firm’s ability to perform a certain activity better than its other activities. Core competency helps a firm in acquiring a sustainable position in the market.

Distinctive Compete distinctive competency has defined the ability of a firm which it does better than its competitors. Distinctive competency or competitive advantage is difficult to imitate and therefore cannot be adopted by every other firm (Investopedia, n.d.).

Building Strategic Capability for Competitive Advantage

To get a sustainable competitive advantage, organizations need to develop and maintain certain strategic capabilities. According to William Scott-Jackson, strategic capabilities are crucial for building future success. According to their research, 50% of sustainable future growth is relied upon developing key strategic capabilities (Scott- Jackson, n.d.).

Strategic capability, when modified and altered as per the given circumstances, transforms into a core competency. Strategic capability can be any task that a firm performs well. It may include brand and marketing campaigns, developing and training world-class levels for staff members, enhancing the process of the supply chain, providing the best quality product at the least possible price, etc.    

To acquire a competitive advantage, a firm first needs to identify those core areas in which it excels. Out of those core areas, one should be selected which demonstrates opportunities for sustainable future growth. Relevant research and efforts must be conducted to transform that strategic capability into a competitive advantage.