Designing and planning a strategy is comprised of huge risk and resource valuation, conducts to counter the risks, and operative utilization of assets all while trying to attain an important purpose. The introduction of a business is done with an objective in mind, and this objective determines the drive for its existence (MacLennan, 2010). The entire work performed by the company rotates around this specific objective and it has to bring into line its external and internal resources in a way that the objective is attained in expected time. The intent of this report is to analyze how Easy Jet Airlines comply with its strategic objectives with the help of different strategies. Besides this, it will discuss different external and internal environmental factors that have an influence on the strategic objectives of the company. The report will also provide an industry analysis of the Easy Jet in order to recognize its position in contradiction to its rivals.
Easy jet Airline is a low-cost carrier airline with headquarters in London. It runs international and domestic planned services on around 820 routes in over 30 nations. The company is listed on the Stock Exchange of London and is a component of the FTSE 100 Index. Easy jet hires around 11,000 people, grounded all over Europe but mostly in the United Kingdom (EasyJet, 2018). The overall fleet of the company is divided between 186-seat A320s, 180-seat A320s, and 156-seat Airbus A319s. It also concentrates on running its fleet of A320neo aircraft. The bases of the company comprise Switzerland, Amsterdam, Barcelona, United Kingdom, France, Lisbon, Venice, Italy, and Oporto. It operates in airports like Nice, Venice Marco Polo, Geneva, Gatwick, Naples, Edinburgh, Basel, and Milan Malpensa. The company provides a mobile application-only plan, directing patrons desiring to change flights at short notice on the day of travel, and provide pre-purchased in-flights coupons (EasyJet, 2018).
The mission of EasyJet is to offer customers with good value, point-to-point, and safe services. It is focused towards providing a reliable and consistent product and fares attractive to leisure and business markets on a variety of European courses. To achieve this mission company will develop its employees and establish long-lasting relationships with their suppliers (EasyJet, 2018).
The vision of EasyJet airlines is to increase its strength of being the biggest airline with low-cost flights in Europe (EasyJet, 2018).
In 2016, EasyJet functioned in a stimulating political environment, characterized by key terrorist attacks at major places like Brussels, Nice, and Paris. The main political shock was Brexit when in 2016, Britain chose to leave the EU, a step expected to cause both economic and political disturbance and ambiguity for not only companies but also the economy of United Kingdom (Hunt and Wheeler, 2018).
The uncertainty ensuing Brexit had an economic influence on numerous airlines in the United Kingdom comprising EasyJet. Because of the value dropping of Pound Sterling, the revenue of the EasyJet earned in abroad currencies benefited, but in total, the influence of exchange was adverse on the financial results of the company with a cost of around £112million in foreign exchange (The Guardian, 2018).
In 2016, the summer season was tough for numerous airlines comprising EasyJet, majorly because of social forces present outside the control of the airline, specifically, air traffic controller (ATC) strikes in France. A large number of ATC union strikes smash France in 2016 because of social strife over a chain of uncertain labor changes from the Socialist administration, instigating EasyJet to revoke numerous flights to and over France (Support the Guardian, 2015). Further, in recent times in 2017, French ATCs initiated a strike of five days that majorly influenced the EasyJet out of all the airlines because of delays and cancellations as around 60% of the company’s flights touch the French airspace. EasyJet airlines and other different airlines have now appealed the EU and the French administration to establish an action plan to reduce the influence of ATC strikes on travelers.
The industry of airlines is presently experiencing digital disruption after some years of comparative constancy following 911. The digital upheaval has been escorted by the internet and the major part is performed in how the customers travel. More prominently, digital technologies are substantially altering the industry’s cost structure, allowing new participants like WOW Air, to make use of digital technology to disturb the legacy transporters like EasyJet Airlines and Ryan air.
London Country Court Judge imposed fine of around £10,671 on EasyJet in regards to the contract breach in a compensation claim carried by a customer Zevy shone in 2013 who was stopped boarding back deprived of a choice of recompense or re-routing and reimbursement (Daily Mail, 2018). After waiting for some years for cost reimbursement the traveler took EasyJet to the court and won, it was a momentous win for travelers but a loss for the company and other companies too that continuously fail to get the support of the passengers at the time of check-in.
The changing climate, global warming, are said to be the key topics everywhere. People are very much alert of the influence of changing climate because all of them have experienced few types of adverse disaster; from record-breaking hot temperature and sub-zero temperature, floods, rising sea level, floods, etc., that have been ascribed by experts to global warming.
The Porter 5 forces are a simple but powerful tool to understand where business has its control in the industry. It supports in understanding the strength of the company in the competitive market (Schwarzinger, 2012).
The manufacturers of aircraft are visibly the main supplier’s in the Aviation Company so considering the EasyJet case its key supplier is Airbus and Boeing. Another main supplier for the aviation company is fuel businesses because it is the necessity for running the aircraft. This reflects that the bargaining power of the suppliers is high (Fern fort university, 2018).
Customers possess a huge power because of a greater system of distribution. They have various options for booking the tickets. The customers buying power has majorly influenced the EasyJet due to a large number of options available in relation to fare (Fern fort university, 2018).
The threat of substitute products in the airline industry is low. However, two elements increase the level of threat. First is, there is the tremendously low cost of switching. Second, there is the absence of exclusive services or products involved.
The competition in the industry of airline is very intense for numerous reasons. The industry is presently very sluggish. It looks to be at the maturity stage of the life cycle of the business. Numerous of the rivals in the industry remain similar in the long-term but it does not appear to be under or over capacitated. The airline industry is comprised of high fixed costs. Exiting from the industry is very tough considering the long-term loan contracts that make businesses stay in business (Lorisangella, 2014).
In the industry of aviation, entry and exit barriers are comparatively high, as a high amount of capital is needed in order to enter the market. Besides this, the airline company cannot exit from the industry once they have entered as the laws restrict them because they are frequently claimed to complete their duties they have taken for the contract (Lorisangella, 2014).
In challenging legacy carriers, the main advantage of EasyJet is its structure of price, which reflects it average prices somewhere 50% lesser than the key carriers on short-haul courses and 20% to 40% lower than the other rivals with lower cost flights. Besides this, the dynamic revenue management system of EasyJet regulates fares as per the level of demand to increase revenues, regardless of always charging lowest fare (CAPA, 2013).
The earnings of EasyJet are very much seasonal, due to which the profits of the company are majorly dependent on the peak summer season in order to balance a loss-making winter. This makes it exposed to any kind of unforeseen difficulties in the summer that is affected by ‘one-offs’.
The business model of EasyJet Airlines has now become blurred due to the pressure of competition and merging of the Low-Cost carriers industry. The company now regularly innovate in order to maintain its present advantage in e-tailing (MBA Skool, 2018).
Though disreputably cyclical and presently going through a sluggish stage, the sector of aviation stays growing in the medium and long-term. EasyJet, being a major market player, is well established to be a part of this growing industry. Furthermore, considering the price and cost advantage of the company and present capacity cuts the profits of many of the carrier competitors, this reflects that the company will enjoy an increased market share in the future (CAPA, 2013).
The advancement in the technology in conducting meetings in the business such as video conferencing could be damaging short distance flights and increasing environmental taxes could result in increased business cost (MBA Skool, 2018).
The presence of EasyJet at a numerous number of high-cost airports, maximum of which enjoy regulatory price upsurges, offers a breeze on its determination to rationalize its costs.
The VRIO Framework is said to be a tool utilized to evaluate capabilities and internal resources of a company in order to identify if they can attain a competitive advantage in the market. Barney, J.B., established the tool, and according to his resources, resources of the company should be valuable, rare, imperfectly imitable, and non-substitutable (Barney and Hesterly, 2010). If the resources of the company can be used appropriately then it can attain a competitive advantage over its competitors based on four characteristics i.e. how valuable the resource is, how rare the resource is, the resource can be imitated or not? Is the organization of the resources is done properly? If the answer to these questions is yes then the company has a competitive advantage over its competitors (Peng, 2010).
Value – The cabin crew of EasyJet is famous for its high-level consumer direction, teamwork and one of the superior service providers in the industry. Besides this, the company charge low prices tickets from the passengers as compared to other major players in the market (EasyJet, 2018).
Rarity – Rarity offers a competitive advantage. It has been observed that the company is regularly involved in different kind of innovations such as the telephone reservation center was a strong e-business strategy (EasyJet, 2014).
Imitability – The business model of EasyJet has now become blurred which reflects that the competitive advantage will be temporary in the market (Financial Times, 2018).
Organized – The structure of the company is organized and the employees of the company are expert in their department that support organization in organizing all the resources.
|
Resources |
Value |
Rareness |
Imitability |
Organization |
|
Physical Resources |
Yes |
No |
No |
Yes |
|
Business Model |
Yes |
No |
Yes |
Yes |
|
Digital Platform |
Yes |
No |
No |
Yes |
|
Fleet |
Yes |
No |
Yes |
Yes |
|
Staff |
Yes |
Yes |
No |
Yes |
The factors that can increase the expectation of the customers and distinguish EasyJet from other major airlines are:
The major factor of EasyJet’s achievement is its low-cost business model. The model allows customers to purchase direct tickets through the internet and eliminates the travel agents commission (EasyJet, 2018). Besides this, the business model of the company is framed in a way that supports crew members to reduce the turnaround time in order to prepare and secure for the next flight. As the compensation of the employees is typically the essential element of overall airline cost, therefore EasyJet manages its cost by using performance appraisal techniques. The company always believe that the cost of labor is lesser as compared to its competitors.
With the developing market, it is very important for every organization to bring new strategies to survive in the market. One of the best ways to stand out in the crowded market is innovation. In order to achieve this, EasyJet needs to bring new and innovative technologies in the airline business such as offering advanced chairs in the business class cabin that could be converted into a bed or a bar service in the premium and business class.
From the above analysis, it has been identified that the resources and business model of EasyJet has become blurred, which offers greater disadvantage to the company in terms of revenue and market share. In order to avoid this type of situation, a company needs to get involved in the Joint Venture with different airline company such as Lufthansa Airlines and Ryanair. This strategy will offer better resources and expertise that can reduce the chances of the blurred business model.
SAF Framework is used to analyze the effectiveness of the selected strategy in the business. There are three criteria in the framework i.e. Suitability, Acceptability, and Feasibility that are used to check whether the strategy will be a success for the company or not (Knaster and Leffingwell, 2018).
Suitability – The suggested strategy of bringing innovation is suitable, as it will help the company in increasing its market share. On the other side, the strategy of the joint venture will help the company to enhance its business model.
Acceptability – The employees, as well as customers of the company, can accept both the suggested strategies as it will provide benefit to them.
Feasibility – From the perspective of the organization, the strategy of bringing innovation into the organization is feasible as the company has a good financial position in the market. However, it will not increase the market share of the company because other matured companies are already providing these types of services. However, the joint venture can be a positive strategy that helps the company in attaining a competitive advantage in the market.
|
SAFe Framework |
Strategy A (Ranking out of 10) |
Strategy B (Ranking out of 10) |
|
Suitability |
8 |
8 |
|
Acceptability |
8 |
8 |
|
Feasibility |
5 |
8 |
|
Total |
21 |
24 |
From the above analysis, it could be observed that strategy B is better than strategy A.
From the above analysis, it has been identified that the company is dealing with some challenges from the political and economic forces. These forces have a major influence on the performance and revenue of the company, therefore, in order to manage these forces, the company needs to come in the negotiation of the responsible government, such that the effect of these forces can be reduced.
Conclusion
EasyJet is one of the known airline companies of the industry, which leaves a major responsibility for the company to offer the best services and facilities to its passengers. From the analysis, it has been recognized that company is putting its maximum efforts to offer service to its customers, however, the weakness of blurred business model affect the performance of the company in contradiction to its competitors. In order to avoid such type of challenges, the report has suggested a company to adopt the strategy of Joint Venture with one of the matured and established airlines such as Lufthansa Airlines and Ryanair.
Being low-cost airlines, EasyJet is able to earn profits only in the summer seasons; therefore it is recommended to bring new and innovative discount policies that can attract customers in the winter season too.
From the above analysis, it has been identified that EasyJet is opted by the customers for shorter routes, which limits the profit margin of the company. Therefore, it is recommended EasyJet needs to operate long route flights in order to increase its market share.
References
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Daily Mail (2018) £5,000 victory for the man who put easyJet in the dock because his flight was canceled [online]. Available from https://www.dailymail.co.uk/news/article-1391716/5-000-victory-man-easyJet-dock.html [accessed 13 December 2018]
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