LA-D Other Factors Affecting The Industry Flashcards Preview

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Flashcards in LA-D Other Factors Affecting The Industry Deck (41)
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1

External factors

Arising from issues outside the organisations control

2

Internal factors

Within the control of the organisation

3

Economic external factors

Strength of the economy - business cycle
Disposable income
Currency exchange rates
Oil prices
Responses to economic factors

4

Economic external factors - strength of the economy
How does it affect the industry as a whole?

Impacts how much money people can spend on travel and holidays
Impacts how much businesses can borrow and how much they can impacts back into their business

5

Economic external factors - strength of the economy
Recession

The economy is in recession when there is a significant decline in the production of goods and services, employment and income for no longer than 2 financial quarters

6

Economic external factors - strength of the economy
Growth

The economy is growing when there is a positive change in the production of goods and services over time. In a period of growth, customers are likely to spend more money.

7

Economic external factors - disposable income

Recession - people have less disposable income and more likely to lose their jobs
-means more likely to take a cheaper holiday or not at all
-DI also affected if the interest charged on mortgages goes up or down as this influences the amount of money people have to spend on their mortgage repayments

8

Other factors affecting the industry - currency exchange rates
Growth and recession

Growing economy - the currency becomes stronger -worth more-compared to currencies in other economies
Recession - the currency will become weaker -worth less

9

Other factors affecting the industry - currency exchange rates
How does it affect the tourism industry if pound is strong against Euro?

UK outbound travellers will get more euros for their pounds and will have a cheaper holiday in Europe

However a strong pound will make inbound tourists from Europe to U.K. less likely because their holiday will be more expensive for them

10

Other factors affecting the industry - currency exchange rates
How does this affect businesses and organisations?

Monitor exchange rates closely as they affect the prices that they pay for accommodation and services in overseas resorts

11

Other factors affecting the industry - oil prices
What does it affect?
Indirect effects?
Why do oil prices fluctuate?

Transport principles such as airlines
They are very dependent on the price of oil and tour operators are indirectly affected by this as they have to buy flights for their customers
World oil prices fluctuate depending on the supply and also any political situations that may affect access to oil reserves

12

How do organisations respond to economic factors?
-general businesses
-negatives

One way that organisations respond to economic factors is by using competitive pricing. This is where they look at competitor prices and try to undercut them. One negative of this is that organisations may continue to undercut each other making prices so low that it is unsustainable and leads to them not making a large enough profit. -fail

13

How do organisations respond to economic factors?
-transport principles - airlines

A strategy that transport principles use is called fuel hedging where they agree a set price for fuel for a period of time. This can negatively affect the business as if the the price of oil drops they still have to pay the agreed upon price. However if the price goes up and the business has insuffecient funds for the cost of fuel in the price of the holiday, they may pass this cost onto customers which is a very unpopular strategy and may lose customer loyalty

14

Other factors affecting the travel and tourism industry

Economic factors
Social and lifestyle factors
Government legislation and legal factors
Safety and security
Health
Environmental and climatic factors

15

Social and lifestyle factors that affect the t and t industry

Rise of the grey market
Millennials
Changing family structures
Changing working patterns
Holiday allowance and pay
Current fashion and trends

16

Why do businesses need to understand lifestyle of customers?

To know their market and how to target them specifically

17

Social and lifestyle factors - rise of the grey market
Who and how they affect the industry?

Baby boomers are the generation of people born after ww11 - 1946 - 1964
-they have been important in driving the t&t industry
-they are a large social group, making up a significant part of the UK population
-they had more disposable income than previous generations and therefore control most of the UK's wealth

18

Social and lifestyle factors - rise of the grey market
Why are they more likely to travel?

-Most have become part of the grey market (old retired people with time and available funds who want to travel)
-many have contributed to private pension schemes during their working lives meaning they have a good income during retirement and time to spend on travelling

19

Social and lifestyle factors - rise of the grey market
Why are they more likely to travel?
-healthcare

Improvements to healthcare have led to and increase in life expectancy meaning that this generation is expected to travel into old age

20

Tour operator specialised for the grey market

Saga is the most prominent tour operator catering for older people

21

Social and lifestyle factors - millennials
Who and their importance?

People born between 1980 and 1999 as they are getting older they are becoming as important as baby boomers
-they are the children of the baby boomers and have grown up in the internet age

22

Social and lifestyle factors - millennials
characteristics

-good technology skills
-generally want to try new experiences, go on adventures and experience different cultures
-most likely to research their own trips and book them online, and they are also the most likely to post reviews online

23

Social and lifestyle factors - millennials
How has education effected travel?

-More people go to university and more of the population achieve at least a level 2 qualification (GCSE)
-better education leads to a population that is more aware of the outside world, curious about different cultures and languages and keen to experience them
-students often opt for a gap year before starting uni which opens up a whole market in travel and tourism industry

24

Social and lifestyle factors - millennials
How has Britain's society effected the industry?

-The UK has a multicultural society, British people are more familiar with different religions, foods and cultures and so they are less anxious about the unfamiliarity involved in travelling to new paces

25

Social and lifestyle factors - changing family structures
Larger families

-Families are bigger than previous years because life expectancy has increased meaning families are often multi-generational
-more geographically dispersed as people are more likely to move different areas of the country
- the internet has made it easier to stay in touch with free or cheap forms of communication such as Skype, WhatsApp , Instagram

26

Social and lifestyle factors - changing family structures
Single parent families

The ONS has said that there are 2 million single parents with dependant in the UK
-this is a large increase from 1.6 million in 1996
-this has led to holiday companies offering specialist products for single parent families

27

Social and lifestyle factors -Changing working patterns
What are the changes in working patterns?

-2003 - flexible working regulations came into force in the UK which gave employees who are looking after young or disabled children the right to request flexible working arrangements from their employer
-2007 - this was then extended to people with other dependants
- flexible working as become normal and means that people now have more flexibility about when they can go on holiday

28

Social and lifestyle factors -Changing working patterns
Technology

Technology has improved work flexibility as lots of people are able to work at home using mobile phones, email and video conferencing

29

Social and lifestyle factors -examples of changing working patterns

Many people choose to work reduced working hours to allow them to carry out other responsibilities or have a better work-life balance
-parents may work term time only
-flexitime for time off

30

Social and lifestyle factors - holiday allowance and pay
How does holiday allowance vary?

1938- the holidays with Pay Act entitled workers in the UK to take a certain amount of paid holiday (currently 5.6 weeks who work 5 days a week)
-part time workers get the same proportion of holiday but is calculated pro rata for the number of days they actually work
-some employers include bank holidays in their allowance but others are more generous