Taken together, those restrictions mean that summer 2021 is looking increasingly in doubt. Implications from the strategy chosen. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. Currently, around 12% of boarding passes issued by easyJet are mobile passes, although this can be as high as 50% for some flights. A PESTEL analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well. Do you have a 2:1 degree or higher? When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. This results in a very strong competitive rivalry in the industry. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. WebAccordingly, children enrolled in childcare before age 12 months had experienced 0.5-0.7 more infections at age 6 years (in total 4.5-5.1 infections) than peers enrolled at age 3 years, differences that persisted throughout adolescence. EasyJet may be prepared and has to a large extend engaged in price war with competitors via its lower cost structure (economies of scales due to its larger operations) and also has the financial resource capability to fund short to medium-term losses with the aim of driving out competitors in the longer terms. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. We will consider the value chain for EasyJet in more detail later in our discussion. However, by year 2000 it has not only managed to survive but also increased its market shares and assets of aircrafts to 74 and servicing 105 routes and carrying over 20 million passengers a year. EasyJet through its use of an overall cost leadership strategy can use internet-based technologies to reduce value chain costs in a variety of ways: On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expense. Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. Within weeks of the vote, Findlay, EasyJets CFO, announced his intention to step down, and analysts speculated that the stress of Haji-Ioannous campaign, on top of that caused by the pandemic, had taken a toll. EasyJet raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. Step 1: Identify and document risks. The linkages with the value chains of channels and customers which are the essence of EasyJets capability and which can protect its market leadership and maintain cost leadership competitive advantage from competitors. Those airlines are more dependent on business travel, which many analysts forecast might not fully recover from the pandemic until 2024if it ever recovers at all. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. The same figure for Ryanair was 2.25 pennies, while it was about 5 for British Airways and 5.37 for Air France and KLM. Offers may be subject to change without notice. This has the highest risk, but So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. Get in touch with us. )The crisis has also posed complications for the 54-year-old Lundgren that his competitors dont face, including some particularly unwelcome excess baggage in the form of Stelios Haji-Ioannou. It hoped these measures allow the public to feel confident flying again. Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. The pace of recovery will be determined by vaccination rates, Alton Aviations Ryan says.The problem for EasyJet is that almost all the routes it flies involve Europe, and the continent was lagging far behind on vaccinations. EasyJet also have a reputation for paying low wages in line with its low cost strategy. To accomplish that, Lundgren has taken drastic steps. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. And the simulators have been kept busy virtually around the clock, even during the pandemic, as EasyJet has sought to keep its pilots properly certified so they will be ready when flying returns. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. Firstly, threats in terms of new & existing competition. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs WebeasyJet is aiming to become the worlds most data-driven airline. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. Focusing on improving the control and decision making across operations. The management of the element of working capital. The Matrix outlines four possible avenues for growth, which vary in risk: Market Penetration. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. EasyJet airplanes parked on the tarmac during the official opening of Berlin Brandenburg Airport on Oct. 31, 2020. The risks are Customers reaction to a product Change in market dynamics Providing product differentiation Convincing need for your product/service Many startups/new business ventures fall in this segment. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. In mid-May 2020, the company revealed it had been hacked. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. Normally there would have been close to 100. To understand EasyJets prospects, its important to understand its strategic positioning. EasyJets no frills strategy does not only mean a cut in Cabin crew and denial of food, but also allows for a faster pre-flight preparation, thereby reducing the time grounded as well maintaining fare. This will identify its strength, weaknesses, opportunities and threats. 8. Ties are banned except for pilots! Decisions must be made on the trade-offs inherent in development of a strategy. Therefore, the low cost strategy is the ideal strategic fit to its environment. Potential negative outcomes include bad publicity and a The existing competition also have strong brand image globally, EasyJet is recognised nationally and within the European markets, however, national airlines like British Airways is recognised worldwide and has stronger brand awareness. Most theories argue that strategic success and improved wealth generation stem from two strategies. Many of those airlines are limping along on government funding they might never be able to repay, says Leah Ryan, managing director of Alton Aviation, a leading industry consultant. Appendices 1. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. Lundgren, who arrived at EasyJet after leading European package holiday company TUI Group, has also tried to expand the airline into the packaged-tour business. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. To enjoy unlimited access to our journalism, subscribe today. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. Increasing automation driving self-service capabilities for customers. The fourth force is the bargaining power of buyers. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. And they are relentlessly focused on keeping per-seat costs down. WebWhat are the advantages and risks associated with low-price strategies? EasyJet cost efficiency is achieved in a variety of way as shown in the following diagram: The success of low-fare (cost) strategy is primarily dependent on the maintenance of a low cost base. As Internet transactions have a lower cost associated with it EasyJet encourages its customers to book on-line by offering them a discount for on-line ticket reservations. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. The company has announced plans to reduce its 15,000-person workforce by 30%. The fuel-efficient jets could help EasyJet reduce its carbon footprint at a time when consumers and governments seemed increasingly likely to hold airlines accountable for their climate impact. He said he had discovered a secret meeting in Switzerland, arranged by Airbus, between top EasyJet executives and a lawyer who, according to documents revealed in the Panama Papers leak, may have helped clients evade international sanctions through offshore shell companies. When the risks are specific to a certain activity the risks will be managed, and maintained Ryanair had even tried to capitalize on this connection between vaccinations and travel in its marketing, rolling out at jab and go advertising slogan in January, which it had to withdraw after objections from Britains Advertising Standards Authority that it was not promoting responsible behavior. The primary weakness is the perception of low quality low cost can also be seen as low quality service than that offered by the established national airline i.e. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. The airline also managed to reduce itsfuel cost per seat flown by 2.9% through a series of small changes: instructing pilots to use only one engine when taxiing, for example, and to climb to cruising altitude as fast as possible, since level, higher-altitude flying is more fuel-efficient. In a vast hangar on the outskirts of Gatwick Airport, one of EasyJets big hubs, sit a row of five space-age pods, painted in EasyJets trademark orange-and-white colors. Product Development. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. WebThere are two types of strategies taken in account in the Easy jet such as differentiation strategy which is the strategy in which the industry has the particular rules and This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. Still, the connection was critical for airlines. Transfer the risk. This text provides general information. Diversification. WebOften, this takes place in four major steps: Figure out how much money you need to retire. The customers of EasyJet have been using the Internet for making bookings. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. That move also diluted Haji-Ioannous stake in the companys stock from more than 34% at the beginning of 2019to just under 30%, making it easier for EasyJets board to ignore the demands of its querulous founder. Study for free with our range of university lectures! Our academic experts are ready and waiting to assist with any writing project you may have. This is intensified as a result of little or no differentiation in the service offered. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Potential threats in terms of changing social trends like holidays outside Europe (many now want to experience the eastern cultures and travel to holiday destinations like China and Japan) and also travelling via the EuroStar to Paris etc. Yield management is a form of risk management and therefore, adds value. Since March 2020,European governmentshave provided more than$32.2 billion in bailouts to the airline industry,through a mix of grants, loans, and debt-for-equity deals, according to a report from HSBC. Furthermore, a lifetime history of D In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. Budget airlines that rely on the leisure market make most of their money from April to August. But EasyJets contract required itto paythe aircraft maker at least $6 billion through 2023a sumconsiderably greater than the airlines entire current market capitalization. LEGAL The European deregulation of the commercial aviation provided both major strategic threats and opportunities, the national mainstream airlines faced severe price competition from discount carriers. (The others are rival budget airlines Ryanair and Wizz Air, as well as Southwest Airlines in the U.S., on which EasyJet originally based its business model. Research expert covering mobility and logistics. Previously it used telesales and now sales are through e-commerce web site. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). Significant investment in assets and managing financing costs. easyJet is building a network of key cities, broadening their presence across Europe. Advantages of Choosing In-House. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats (SWOT) will assist in gaining an understanding of where EasyJet is currently in terms of strengths and where improvement is required within the business and what outside environmental threats it may face as well as what new opportunities are available to the company in the short and medium term. It also offers passenger a few more extras, such as allowing them to check in at the airport without charge (Ryanair charges passengers who dont check in online) and a loyalty program that confers priority boarding privileges. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). If COVID doesnt ease more quickly, and leisure travel doesnt rebound as hoped,EasyJetshole will only get deeper, and its plans to grow could be spiked indefinitely. 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