Eurostar Company: The Competitive Strategy

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Introduction

Euro-star is a tours and Travel Company located in the United Kingdom with several terminal points strategically located all over Europe. It specializes in providing world-class passenger train services to its clients who are mainly business and leisure tourists. Euro-star is the first largest passenger train organization in Europe. Recently its chief executive manager announced an expansion program that includes new domestic as well as international markets. Euro-star is a major player in the travel and tour industry, its profit margin went up to about 7% in 2006 and still continues an upward trend. (Rail Europe 2008)

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With the expansion of its programs to include opening up new terminals in Europe as well as other countries on the international border, the future for Euro star looks bright. The major competitor in the industry includes World Travel Holdings. Euro-star will continue being in operation for the foreseeable future, this is supported by the strategic plan that has enabled it to be the industry leader in the whole region. Its power emerges from its monopolistic nature in the business industry, economies of scale arising from mainly its size. (Qual Tech Conference 2008)

The company recently opened a new terminal point at St Pancras that offers convenience as well as the flexibility to its customers in the region; it operates different types of classes that suit the various needs of its clients. Euro Star’s belief in maximizing its employee’s potential is highly evidenced by replacing manual data entry with the concept of information integration. The implementation of a sophisticated revenue management system at all levels in each and every terminal leaves a lot to be desired about the company. (Artestis&Sawyer1999)

The Green Tourism for change

Pressure is mounting on businesses to be ethical, socially responsible, and at the same time meet major organizational objectives for performance. Many organizations have found themselves technically beaten down simply because they never acted with regard to the social environment. There is a physical interdependence between organizations with the environment. In this case, Euro-star depends on the environment for its entire operations and at the same time, the environment looks forward to benefiting from Euro-star. (London Corporate 2009)

Green tourism is a system that was adopted by the company as a social obligation to reduce the effect of emission of carbon into the environment. This strategy has received tremendous support from different sectors in the environment and is likely to lead to a positive image of the company. Recently businesses have fallen under fierce criticism by the public. Pollution is currently one of the most complicated problems that the world is trying to deal with. (Scoop Business 2009)

This strategy as adopted by the Euro Star is likely to lead to environmental sustainability. The rationale behind this strategy is to conserve the scarcely available resources for present and future generations and to ensure that people do not suffer from any disease related to carbon. Just like manufacturing firms the availability of raw materials is core to their primary activities. So any organization that is determined to uphold the standard for future performance and to continue being in existence must be socially responsible (Miranda 2004)

Green Tourism will also ensure that the firm remains strategically positioned to better understand the needs of the environment as they emerge. This will help bolster up the relationship between the firm and the society as well as the government and the related environmental bodies and hence enhance high chances of mutual cooperation with other like-minded organizations. Other large-scale businesses have different ways of the rewarding environment; including conservation i.e. tree planting, promoting equal employment, charities, sporting activities, and many others. (Ringbeck & Gross 2009)

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The company’s current competitive position

Euro-star is still a force to reckon with in the industry. Since it’s the largest train passenger company in Europe linking England and its vicinity to France it has gained a strong monopoly in the region. In fact, numerous terminal points strategically located around Euro-Star have become the major choice for most of the passengers both in the global and domestic arena. Eurostar has remained ever competitive in the marketplace by offering world-class services to its clients located everywhere on the globe. (Springboard to global growth 2007)However its strategy remains the following:

Pricing

Eurostar operates two main pricing strategies i.e. dynamic and static. The two strategies ensure that not even a single competitor poses a challenge to the firm as far as the pricing is concerned. Dynamic pricing refers to a situation where the firm keeps on changing its price according to the changing environmental factors in order to take into account the benefits associated with price changes. (Kelly 1980)

Dynamic pricing is important more so in the industry of travel and tours where the price changes according to seasons i.e. Peaks and off-peak. Critical managers benefit by altering prices to match the changing demand. If the price remains constant then the firm may suffer detrimentally in the short term. (Strategy Research Agenda 2008)

Static Pricing

This refers to a fixed pricing strategy by the firm to different destinations throughout the year. The major reason for this is to ensure that the firm’s long-term, as well as short plans, are met without any problem and that the break-even point is achieved in order to keep the company going. (Kelly 1980)

Revenue system

The company has adopted a new revenue system where the management can be able to forecast its revenue for the next period and then integrate it into the system. The system is user-friendly and is therefore used by all employees it includes off-peak and peak season demand budgets. This has ensured that there is proper financial management at all levels in the organization. (Robert 2009)

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Information technology

The recent use of technology in the business environment has revolutionized the manner in which most of the activities are carried out in the business environment. This is to achieve greater efficiency and effectiveness in the workplace. (ESCAP 2009) The use of information technology has helped Eurostar to maintain its competitive advantage in the industry through the following ways;

Online booking, passengers both in the domestic and international borders can now book online without the need to travel to specific terminal points, this implies that customers can apply in advance and as well make payment through the electronic system. This will ensure that the company minimizes the costs associated with intermediaries all over. Eurostar is also in the process of implementing a system comprising print at home mobile-enabled bar corded tickets to speed up the boarding processes in all its terminal zones. Recently the company has consolidated its booking with the United Kingdom train network so that customers can book entire journeys from the United Kingdom. (ESCAP 2009)

The system is receiving major attention with terminal zones like St Pancras witnessing wireless broadband, the presence of CRM also helps improve visibility and communication. Euro star’s success lies behind the invention of the digital satellite disc used distinctively by the organization. You can imagine how ambitious the company is to change completely the phase of its key functions. (ESCAP 2009)

Corporate social responsibility

By adopting the Green Tourism culture the company claims that its service does not produce a lot of carbon dioxide and is, therefore, user friendly, passengers nowadays insist on punctuality, reliability, and environmental impact as determinants of which travel means to use. The use of Green Tourism has led to an increase in the number of clients who are mainly leisure and business travelers and could be seen as a strategy on its own. This is viewed in the wider spectrum as social responsibility compliance. (Perth & Kinross 2002)

High-speed passenger train

The construction of a high-speed passenger train to a new terminal point i.e. Pancras has improved the value of services offered by the company through journey time reduction, improving station facilities, and ensuring punctuality. The general effect is that the number of clients has doubled and revenues increased. This has made Eurostar remain the leader in the industry. Some of the key players in the industry include Land and Continental Railways and World Travel Holdings. These do not seem to bother Eurostar as the company has already positioned itself well in the industry. (Mercury 2008)

Critical Evaluation (Ansoff Matrix)

The available options represent the company’s strategic plan for the next generation. Using Ansoff’s grid to carefully evaluate the next strategy i.e. developing a market, penetrating, Diversifying, and then developing a product. Eurostar is the largest Passenger train Service in Europe with branches in almost all continents except Africa. The strategic plan that was recently announced by the chief executive was to open up more business opportunities in the Middle East and Africa. (Mercury 2008)

Developing a market

As we have said that Eurostar has no branches in Africa it would be necessary that market research is done in this region. Since Africa has more than fifty countries market segmentation could be the most appropriate mechanism to reach out to individuals. The company can use different sales channels but most probably online. Services can be put on the websites so that travelers can view and make informed decisions. Africa is likely to offer a strategic advantage to the company as most clients will be mainly leisure travelers who would be interested in adventuring about the scenic beauty of Africa. (ESCAP 2009)

Electronic commerce is the way forward as increases interconnectivity between the sellers and buyers. It’s also personalized marketing that reduces operating costs for the entire company as it will require no intermediaries and thus eliminating their associated expenditure and margins, this will ensure that clients access the information they want at anytime anywhere. (ESCAP 2009)

Market penetration

This refers to entering a market; most organizations have different techniques of market penetration. In this scenario we are dealing with an international market therefore a different approach is needed in order that successful work is achieved. Regional advertising is not appropriate and therefore international advertising agencies would be desirable. Eurostar can ensure that this is done by using the internet to dispatch the information to various clients across the border. (Rigatuso1992)

Marketing strategies will be aggressive and may comprise ambitious and powerful teams with the sole agendum of monopolizing the region. Eurostar can decide on which way to go whether to buy the already established rails or construct new lines. In some countries there are stringent rules for making such capital investment and the only possible way is to partner with like-minded organizations or buy an already existing venture. (Demand Metric 2009)

Another strategy could be to organize open price launchings, exhibitions around Africa through appointed travel agents in the chosen regions who will be tasked with providing valuable information to the clients and demonstrating where necessary. (Sales Racehorses 2007)

Diversification

Diversification refers to investing in more than one product in different industries so that when one line fails then the investor is likely to benefit from the other one. In times of volatility, investors are normally faced with difficulties in predicting market performance in the future. During this period it would be advisable to invest in different portfolios yielding the best return to the firm. Eurostar is a key player in the transport industry; however it has diversified its business lines to include airline flights across Europe it can partner with KLM that is already extending its services to some parts of Africa like Nairobi, Lagos, and South Africa, this means that in the event of any risk that would be unfavorable for the airline industry, it will benefit from the other lines. (Finra 2009)

When looking for new markets it’s important to diversify many products so that the risks associated with product failure are minimized. The investor can rest assured of market safety, however, this is sometimes not possible as not all investors share the same market perception, and others are more willing to take risks while others are not. (Haberberg& Rieple 2008)

Product development

The existing or new train service would be modified to hit the market in different styles perhaps this could be achieved by categorizing them into different classes’ i.e. first-class comfort, economy class flexible and etc. (Schachner 2000) This would likely draw the attention of new clients in the market suggesting new features. Eurostar is capitalized on marketing leadership, dedicated customer care, research and development centers, a supply management chain, and sophisticated warehousing. Product presentation is vital especially where a new market niche is sought; the poor design is likely to give competitors a leeway and therefore accessioning more failure. (Delfmann 2005)

According to Ansoff, this is a powerful tool for marketing. Most organizations are increasingly finding their relevance and are actively exhausting it.

Conclusion

Venturing into Africa and the Middle East countries is likely to add value to Eurostar in its quest to look for international markets. Its marketing leadership will be charged with the responsibility of ensuring that the new plan does not fail in any way.

References

Rail Europe 2008, Rail Europe introduces Thalys’ new wardrope, Web.

Qual Tech Conference 2008, Session summary, Web.

Artestis, P, Sawyer, M 1999, Will the Euro Bring Economic Crisis, Web.

London Corporate 2009, Green Tourism for London, Web.

Scoop Business 2009, A strong first year for green cabon, Web.

Miranda, Dieperink, C, Glasbergen, P 2004, Environment and Sustainability, Volume 4, Springer Netherlands

Ringbeck, J, Gross, S 2009, Environmental Sustainability as a Driver for competitiveness, Web.

Springboard to global growth 2007, The UK railway sector: Industry leader, world-class solutions, Web.

Kelly, A 1980, Business strategy Design Pattern, Web.

Strategy Research Agenda 2008, “Networked and Electronic Media “European Technology platform, Web.

Robert et al 2009, Revenue managements renaissance: a rebirth of the art and science revenue, Web.

ESCAP 2009, Introduction to internet use for Business Development, Web.

Perth & Kinross 2002, Economic Development strategy and joint action plan, Web.

Mercury 2008, Light at the end of the tunnel for railway, Web.

Rigatuso, C 1992, Aligning strategic and operational planning with balanced scorecard techniques, Web.

Demand Metric 2009, Target market selection, segmentation and positioning, Web.

Sales Racehorses 2007, Expand the core, Web.

Haberberg, A, Rieple, A 2008, Strategic management: Theory and Application, Oxford University Press

Delfmann, W, et al 2005, Strategic management in the Aviation industry, Ashgate publishing.

Finra 2009, Managing investment risk, Web.

Schachner, L 2000, Accountability under industrial Diversification, Web.

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