MG3652 Strategic Management

MG3652 Strategic Management

Question

Answered

Task:
Case Study – ‘Thomas Cook: Analysis of a Downfall’
1. Critically evaluate the strategic decision making process in Thomas Cook which contributed to its collapse in 2019. (2000 words)
 
2. Based on your findings above, formulate and discuss alternative strategic approaches that Thomas Cook could have implemented which may have had different outcomes for the Company. (2000 words). The references NEED to be easily accessible to me. All the links must be clearly outlined in the biblio.
Introduction
Catalyst
The failure of Thomas Cook has led to 9,000 UK job losses. Governments across Europe and Africa were plunged into crisis planning mode as they help with the repatriation of more than 500,000 stranded tourists and begin to count the cost of the holiday company’s demise on already-battered economies. The collapse of the company has many reasons behind it. These include taking on too much debt and failing to adapt to a changing business environment.
Summary
The collapse of Thomas Cook was not something that came as a huge surprise as the writing was on the wall for a number of years. The large increases in debt started in 2007 when Thomas Cook merged with My Travel (a package holiday company).
In 2009 the company had issued its first profit warning and by 2010 net debt had risen from $321m in 2007 to $1.04bn, and to further the debt, in autumn 2011 Thomas Cook was asking lenders for a $129m extension to its loans. By July, it was obvious that the business’s debts were unsustainably high and it announced advanced discussions for a $966m recapitalization funded by Fosun. This sum was then increased to nearly $1.15bn, before exceeding $1.29bn. The company also paid £160m in interest charges to its lenders last year. Some Thomas Cook officials suspect lenders, led by Royal Bank of Scotland and Lloyds Banking Group, were never committed to the financial rescue package.
Thomas Cook is at fault for much of its own demise, but there were still a number of external factors that contributed to the businesses liquidation. One influence that Thomas Cook executives immediately pointed to in the wake of the company’s failure was Brexit. There is no doubt that Brexit has had, and will continue to have, an impact on the travel and tourism industry, particularly in the United Kingdom and Europe.
For many of the world’s oldest and best loved companies it seems inconceivable that it could ever disappear, even though recent history tells us otherwise. In years gone by, no one would have predicted the fall of Thomas Cook, which had been transporting holidaymakers around the world for over a century, however, a combination of debt, mismanagement and pressure from competitors proved too much for the company.