The socio-economic context within which business mergers take place has changed dramatically over the past half-century. The main change was institutional in nature and was caused by the transformation of the management system during the transition to market relations (Bansal, 2020). Organizations began to be perceived and then act as open systems. In fact, in modern conditions, in the process of unification, it is not necessary to try to build a new structure from the elements of the previous one. Travel Group (TG) is a successful example of several mergers that have resulted in notable achievements. However, one should not overlook a number of aspects that can hinder the successful development of a company, both internal and external. Below is a report that analyzes the current state of affairs for TG in terms of the firm’s achievement of its sustainability goal, as well as provides a number of potentially beneficial strategies in the context given.
TG’s Current Organizational Structure
It seems reasonable to state that currently, TG demonstrates quite a significant approach in terms of its organizational structure. The case clearly shows that the company cares about its employees, which is emphasized by its policy towards trade unions. Moreover, the presence of many structural divisions that do not duplicate – but accompany – the ones of the corporations with which mergers took place allows assuming that TG operates smoothly and consistently. For such a big company, the mentioned factors serve as an essential foundation for harmonized decision-making, corporate social responsibility, and employer-employee relations (Meglio & Park, 2019). However, it should be stressed that the social context of mergers inevitably implies a number of issues towards which appropriate policies should be implemented.
In order to provide consistent and expedient recommendations on the current TG’s approach toward its organizational culture and sustainable strategy, a particular theoretical frame is to be applied. Here, it should be stated that in this discussion, organizational culture is understood as “a powerful system of shared norms and attitudes that works as a homogenizing factor for an organization’s employees and gets appropriated by them” (Bhardwaj, 2021, para. 2). It might be assumed that the scholarly dimension tends to use four primary types of organizational culture while conducting the related studies. Vetráková and Smerek (2016) demonstrate the key elements and traits of these types, which makes it easy to understand the essence of the concept. Table 1 shows that organizational culture can possess peculiarities of the following patterns – clan, adhocracy, hierarchy, and market.
Table 1. Types of Organizational Culture
Such a frame can be applied to the case of TG, and it seems rational to claim that its organizational culture gravitates towards the hierarchy type. According to the data available, TG has several subsidiaries that have numerous divisions. In particular, Travel UK is the UK tour operator subsidiary and airline that has the following operational divisions. These are Airline, Commercial, Customer Operations and the following business support departments: Finance, IT, Marketing, Public Relations/Business Change and Human Resources. All of them have precisely determined spheres of competencies and duties, as well as a hierarchy that exists under specific rules and principles. Here, it should be noted that after the recent merger affair, there was a decision to create new organizational structures, given the duplication of a number of functions. Hence, this fact allows suggesting that the current direction of TG towards mergers and acquisitions affects its organizational culture significantly.
At this point, it should be noted that a company rarely possesses the traits of only one type of organizational culture, and TG is not an exception. This corporation measures its organizational performance not only with financial measures but also with the following key indicators – customer satisfaction, employee engagement and sustainability. Such an approach implies that the firm cares about its employees (clan culture) and is aimed at goal achievement and productivity within the industry (market culture). A tendency to implement changes within the company can be considered as openness to innovations (adhocracy culture). However, these changes are mostly related to the inner arrangement of operations and responsibilities, which is inherent to hierarchy culture. The current organizational culture of TG may be presented as Figure 1, in which numbers 1–5 represent the extent (score) of a shift towards a particular cultural type.
Table 2. SWOT Analysis
|Significant hierarchical organization; |
Attention to corporate social responsibility;
Adherence to global standards;
Good approach towards the market conditions.
|Insignificant orientation towards innovations; |
Lack of adaptability.
|Knowledge- and experience sharing due to mergers; |
Creation of new suitable divisions.
|Personnel attitudes towards mergers (sense of fear and uncertainty); |
Current external conditions (Covid-19 and competition).
TG definitely demonstrates a number of strengths in terms of its organizational culture that result from its hierarchical orientation. This approach is suitable for the needs of a company under the circumstances of re-organization due to a recent merger or acquisition. However, strict hierarchy may hinder great performance if the external conditions – that will be discussed below – are pressing and changing. Lack of adaptability here may result in decreased profits and crisis. Moreover, there might be the following organizational risks that come from mergers that – to a great degree – have defined the character of TG’s organizational culture.
Mergers and acquisitions have become one of the most popular strategies in the modern economy. The situation around TG shows that this company was formed due to several mergers, which makes it relevant focus on this aspect here. From a sociological point of view, this phenomenon can, to a certain extent, be compared with associations of states. In both cases, we are talking about associations of social systems that previously existed separately and then created a new, larger system out of themselves (Meglio and Park, 2019). In these conditions, it is natural to ask how painful the process of merging companies today is? Can it be compared with the seizure of the country by a certain aggressor?
The consequence of this situation is high staff turnover and active resistance to organizational change. It should be noted that resistance can manifest itself at different stages of mergers and acquisitions and take different forms. Nevertheless, on the whole, the activity of resistance directly depends on the degree of threats arising in relation to value attitudes, status positions, and the powers of power of specific groups within the corporation (Meglio and Park, 2019). The main problem of personnel management in the context of mergers and acquisitions of companies is to interrupt the chain of fear that runs from top managers to ordinary workers. Mergers and acquisitions are rational processes that optimize the structure of the national and world economy, and staff resistance to these processes can artificially slow down economic progress. Reducing this resistance is an important task for HR managers (Meglio and Park, 2019). The main thing that can be done in this area of work is to explain to employees the degree of their protection in the unification processes.
On the one hand, workers’ natural fear of change is generally intensified by the historical experience of the sickly unification of bureaucratic organizations, as well as by the fear of top managers for their position, which artificially descends from top to bottom. Therefore, the staff is inclined to oppose any kind of merger and acquisition. On the other hand, workers in modern organizations can more rationally assess the threats and positive potential of associations, even in the event of a radical change of leadership. TG has developed a significant corporate social responsibility system to avert the related issues. Still, the following aspects should not be neglected and dealt with in the future.
In the case of a merger or takeover, the average employee changes little in their work. In principle, even the very replacement of a position in the context of a focus on market success depends primarily on competence and not on the thorough execution of orders from the boss. If in a bureaucratic organization of the classical type, a change of boss often meant the end of a career, then in modern organizations, such a change in terms of job loss or complications in promotion is inferior in strength to mistakes in work or failure to meet key performance indicators (KPI) (Bansal, 2020). Therefore, mergers and acquisitions by many employees are viewed not as a crisis situation requiring protection and self-defence, but as a change in the context of their activities, a certain increase in uncertainty, which can lead to positive results for them. Hence, for TG, it seems important to develop employer-employee relations on a regular basis – throughout all the divisions.
Current Strategy’s Appropriacy
TG’s actual scheme in terms of organization structure seems to take into account a number of factors specified above. The stakeholders’ fears and interests are considered (given the presence of trade unions and Joint Consultative Committees), and it might be claimed that the company can develop in the framework of this strategy. However, the described threats and weaknesses should be addressed, and the recommendations on this will be provided below.
Tourism is among the global industries – in which TG is involved directly – that faced the considerable adverse impact of Covid-19. It may be stated that tourism is generally affected by external factors – for instance, situations occuring in particular host countries may result in a large-scale redistribution of traveling to other resort regions (ETOA, 2020). However, shocks as powerful as the COVID-19 pandemic have the potential to paralyze the global travel market indefinitely. Along with epidemics, exogenous factors oppressing the global hospitality industry can also include wars and terrorism, climate changes, sharp changes in oil and oil products prices, currency fluctuations, as well as economic crises.
To deal with the spread of Covid-19, many states close their borders and restrict the entry of foreigners. According to the latest estimates by the International Air Transport Association (IATA), the total international losses of revenues from passenger air travel in 2020 was 50% ($ 434 billion) (IATA, no date). What is more, the World Tourism and Travel Council (WTTC) gives predictions regarding the economic influence of the pandemic, as well as different approaches to the recovery of the industry (ETOA, 2020). According to ETOA (2020), in 2019, this industry employed 330 million employees. The part of the mentioned sector in gross domestic product is $ 8.9 trillion (ETOA, 2020). Generally, the total numbers of job losses in tourism and travel vary between 98.2 million to 197.5 million (ETOA, 2020).
The countries are taking large-scale comprehensive measures to support the tourism industry as a priority for maintaining employment and developing the economy. For example, the WTTC provides the following recovery guidelines (Bakar and Rosbi, 2020). The first is the adoption of global industry health and safety protocols. The second is the introduction of rapid testing to contain the spread of coronavirus among industry workers. Third, this is the continuation of state support for the tourism sector in terms of tax incentives and stimulating liquidity growth. Fourth, it is the implementation of measures to protect workers.
To an exact extent, the current issues around the outbound tourism that resulted from Covid-19 are justifying the progress of domestic tourism. The actors of the industry are to pay attention to the latter, given the fact that it has the capacity to recover more intensively than outbound tourism. Meanwhile, it may be said that among adverse aspects, there are reducing the purchasing power of the customers, fears towards the disease that result in travelers’ aspiration to avoid a crowd (Bakar and Rosbi, 2020). Hence, the mentioned actors are to take into account the sanitary and epidemiological protection measures to a greater degree than before the global pandemic. Covid-19 is likely to aggravate the tendencies that are taking place now. These are the choice of tour packages, eco-tourism, utilization of modern technologies, customization of offers, and application of online platforms.
It should also be noted that even in successful and competitive tourist destinations, there is a problem of assessing the degree of satisfaction of the local community. Administrations do not carry out special events to form a conscientious host community. Support programs for local entrepreneurs are poorly implemented. The creation of an accessible environment everywhere is a big problem, which affects both the quality of service for tourists and the quality of life of the local population. Despite all the declarations and the creation of public councils, the public itself lowers the level of its participation in decision-making on the development of a tourist destination.
The identified basic and additional external factors form the need for adaptation and development of the company and its culture. The management of a sustainable strategy, structure and competition is the main determinant that should be built on the principles of a global concept of sustainable development, which is a crucial aspect for TG that will be discussed below. And this aspect is supported by international cooperation, marketing of sustainable tourism, the will of administrations, environmentally friendly infrastructure and, of course, the formation of a conscious host community by means of the education system.
Recommendations on Organizational Culture
Given the arguments above, it may be said that for TG, it is critical to appeal to the principle of delegation of power and responsibility. This delegation today is implemented not only in relation to individual highly qualified employees but also in relation to groups and teams. Instead of individuals who are completely dependent on their immediate supervisor, there are employees who form self-governing teams relatively autonomously implement their undertakings and tasks (Markopoulos and Vanharanta, 2018). Management in such conditions sets only general goals, and the choice of specific means and all management decisions on tactical issues is taken by the team. It seems apparent that such an implementation would imply a shift towards the clan culture organizational type.
The emergence of new teams in the process of mergers and acquisitions of organizations does not destroy old ones. Therefore, the autonomy of the work of the lower levels, again, contributes to the implementation of unifying processes. The development of a team-oriented management style, which is so fashionable among managers today, translates the issues of personnel management in the united company into a more rational plane and allows combining elements of a new social system, just as new, very different cars are attached to a train, despite the fact that the very principle of movement the travel route remains unchanged.
Democratically empowered staff are more protected – especially under the conditions of the recent merger – and are less willing to make rash decisions just to prevent amalgamation. If a democratic leadership style dominates in the social system formed as a result of the unification process, a significant part of the problems associated with the movement of workers, their resistance to change, can be solved at a more qualified level (Markopoulos and Vanharanta, 2018). In this case, people are less afraid of falling under the rule of a new “dictator” who will be worse than the previous one. Therefore, from the point of view of HR managers, the democratic process during a merger or acquisition should not be interrupted (Casal, Malvido and Fontaíña, 2019). In this process, they can find themselves serious help and more competently carry out the functions of recruiting personnel, determining their remuneration, evaluating work performance, career planning and continuing education for employees.
Then, it should be noted that there are many definitions of sustainable development. The most common is its definition as our common future, which means meeting the needs of the present without compromising the needs that ensure a balanced and healthy life for future generations. According to the World Tourism Organization (2021), sustainable tourism is tourism that takes full account of its current and future economic, social and environmental impacts, meeting the needs of visitors, industry, the environment and host communities. TG aspires to achieve sustainability in its performance, and readiness to adapt to the current changing conditions is crucial here.
This adaptability can be attained only under the conditions of openness to organizational changes and innovation, which, in turn, implies a shift towards adhocracy culture. Due to significant changes, the firm is able to achieve tremendous profit growth. That is why the best way to achieve the company’s prosperity is to use and develop its own innovations. This will allow TG to perform better than competitors; accordingly, by increasing productivity, it can increase the overall profit. There are many examples of when small companies have achieved tremendous success adhering to innovative approaches (Madonsela et al., 2017). Popular social networks are a clear confirmation of that. By automating most of the business, the companies have reduced costs to a minimum, significantly increasing profitability. Nowadays, the introduction of innovation in the enterprise is not a fashion trend but a strict necessity. Analysis of market development shows that the leading positions are occupied by companies whose vector of development is aimed at innovation.
Combining innovative marketing practices allows one to improve relationships with customers in a way they might not even expect. The use of innovations in marketing also has the added benefit of improving online experiences by using data to offer services that match the customer’s personal preferences (Madonsela et al., 2017). It should be noted that marketing innovations differ from other innovations in the sense that they can also be used to promote existing goods or services in a different way than those previously made.
For TG, in order to choose the best option for innovative development and decide on the attractiveness of new products, it is also necessary to calculate the projected performance indicators for each of them and be guided by the dynamics of these indicators. Performance indicators are not the same for different areas of activity. Moreover, the choice of an indicator depends on many factors, both internal and external to a particular unit (Madonsela et al., 2017). Assessment of the impact of innovation on the economy of the enterprise is systematically related to the effectiveness of attracting new and reproducing existing products. This allows one to assess the changes that will occur at the enterprise after the introduction of innovations, taking into account the established initial parameters (product potential, market segments). The evaluation of innovations is carried out according to the degree of their market prospects, economic realization, investment efficiency and impact on the development of the enterprise economy as a whole.
Thus, according to the provided recommendations, TG can improve its organizational culture by shifting towards clan and adhocracy culture, with hierarchy culture prevailing. Such a scenario would imply the implementation of the principle of delegation of power, as well as the creation of the necessary organizational units responsible for constant development and innovative changes. The described state of affairs is reflected in Figure 2 that shows the proposed organizational culture approach for TG. The recommended changes would last at least one year and require investments leastwise about $ 300 000.
The above discussion is dedicated to TG and its current and potential strategies within the scope of organizational structure and sustainable development. It was found that the current approach in terms of the company’s organization is appropriate to an exact extent. However, a number of opportunities for its advancement were identified as well. It was claimed that under the current changing conditions, for TG, it will be hard to demonstrate significant organizational performance by strictly adhering to the hierarchical type. The recommendations suggest shifting the current strategy within the scope of organizational culture towards clan and adhocracy patterns. This can be achieved by implementing the principle of delegation of power and realizing innovations accordingly. Such changes may serve as a great foundation for TG’s further development in terms of organizational culture. This, in turn, will be a solid basis for achieving its sustainability goal and gaining the reputation of a significant company worldwide.
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