EasyJet is an international example, The introduction of Airbus A319 aircraft, combined with the retirement of old generation Boeing 737 aircraft, will result in a two-type new technology fleet, which will commonality and lessen complexity and deliver high level of asset utilisation and reduce unit costs. Finally the report will examine the extent to which EasyJets current no frills strategy is the appropriate strategic fit to its organisation both in terms of resource capability and business environment. 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. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. This will help the companies decision makers understand where the organisation is now. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. This analysis will highlight the fundamental changes that the airline industry is undergoing, especially; in defence to the turbulent environment it faces from exogenous forces (terrorism, oil prices, SARS etc) and endogenous forces. The airline cut a deal with a health care company to provide the test at half the normal cost, or 60 per test. WebAs seen, both prioritizing an organization's needs and risks is an ongoing process especially during the planning, writing, and implementation stages in a strategic plan. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. Still, it wasnt spared from the industrys general carnage. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. Thats the day the U.K. government first advised Britons abroad to return home as soon as possible in advance of impending travel restrictions because of the growing coronavirus pandemic. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. Consumers are optimistic and the travel and tourism industry are now booming again. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. Strategies are largely determined by the extent to which they deliver best value to both customers in terms of being competitiveness in the marketplace (leading low cost airline) and also to provide value to shareholders. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. Powered and implemented by Interactive Data Managed Solutions. There are potential opportunities in terms of new routes and expansion of services offered, EasyJet has already launched a number of new European routes, how about expansion into the Asian Pacific? 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. This results in a very strong competitive rivalry in the industry. 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. 8. Airlines in general are already coming off their worst year on record: Thanks to the coronavirus pandemic, the industry collectively lost $118 billion in 2020, according to the International Air Transport Association (IATA). The 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. A typical approach for risk identification is to map out and assess the value chains of all major products. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Making it easy, enjoyable and affordable to travel again and again for business and holidays. These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. 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. The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Under pressure from airlines, it later lifted this policy for some European destinations, only to reimpose it as infection rates soared again in Spain and France. Budget airlines that rely on the leisure market make most of their money from April to August. EasyJet is forever trying to attain a cost level that is low relative to its competitors. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. EasyJet is known for its low-cost competitive pricing. 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. 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. What happens to EasyJet, which had been one of the strongest players in the airline industry before COVID-19, could presage the entire sectors fate: If EasyJet cant come back strong, what airline can? It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Lundgren says he likes the site because it keeps airlines honest: When customers can see that their inbound aircraft hasnt even taken off from its previous destination yet, theres no point in feeding them the bad news with an eyedropper, as airlines traditionally had done, gradually announcing slightly longer delays. *You can also browse our support articles here >. Our academic experts are ready and waiting to assist with any writing project you may have. The value chain analysis will show the total value added by the airline industry and EasyJet. It now owns just over half its fleet, down from 70% in 2019and six of every 10 planes it does own have been pledged as collateral against its loans. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain We will start by looking at strengths: EasyJet serves diverse ranges of European routes with principle activities in both Leisure and business markets, offering 60 key European routes. But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. For the battered airline, 2020 couldnt end soon enough. For an independent carrier like EasyJet, finding money was more complicated, especially since the U.K. government initially balked at providing the airline industry with a custom bailout package. 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. EasyJet says the funds will give it the firepower to grab slots at premium airports like Paris Orly, Lisbon, Milan Linate and London's Gatwick. The greatest dangers, however, may be the market leaders need to manage its evolving Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. The third force is the threats from the bargaining power of buyers, is this strong for both EasyJet and the entire airline industry with a large number of alternative suppliers, hence, the aggressive pricing strategy. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Over time, a brand may experience enough negative interactions that its reputation is placed into a vulnerable position. EasyJet had a long-term contract with the aerospace giant that would require it to take delivery of more than 100 new planes, including at least 55 by 2024. WebeasyJet is aiming to become the worlds most data-driven airline. Ryanair uncompromisingly fought its way into the market with an aggressive pricing strategy. 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. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. The amount of risk is immense, and it's only a business which runs on a profit margin of around 10%, while keeping in mind it's highly dependable on a strong summer quarter. And, finally threats of any takeover bids from national airlines. This text provides general information. Findlay said only that after almost six years with EasyJet, it will be the right time to pass the financial reins to someone who will help take EasyJet into its next chapter, and Lundgren said he was sorry to see [Findlay] leave.. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. 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 And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Standardisation in its activities as an airline leads to both economies of scale and a simpler product, which is cheaper and easier to distribute. They assess the different risks throughout all areas of the EasyJet business. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. The EasyJet brand is established in the European market, but brand awareness is required outside the continent. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. Brand Awareness is another strength that is attributable to the company In November 1999, selected as a business super brand by the Super Brand Council, recognising EasyJet as an outstanding brand name. Competitive pressure. Just two EasyJet aircraft were in the air, one en route from Londons Gatwick Airport to Lyon in France; another from Belfast to the English Channel island of Jersey. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. Legal and regulatory change. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. WebEasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. 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. Terms & Conditions. Ive always said the four core markets are where we want to put our focus on U.K., Germany, France and Italy, he told the World Travel Market conference in 2018, shortly after the Air Berlin deal concluded. EasyJet was able to operate at only 18% of its 2019 capacity. The idea of remote working can also result in co-ordination and control weaknesses. 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. 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. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. Adjust your investments to The company carries out Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. The first is to reduce the bottom line costs of operation (low cost strategy) and the second is to increase the value of the organisation and its reputation to customers, so that they will demand more or pay more for what they receive (differentiation strategy) (ACCA Paper 3.5 (2001)).
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