At the end of March 2020, EasyJet grounded its entire fleet. Ryanair and Wizz Air cater almost exclusively to leisure travelers. EasyJets competitive advantages via low prices are sustained in a number of ways. 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. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. 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. Diversification. 1 or No. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. 100 per cent direct selling of fares; over 90 per cent of sales are online. Lundgren had been an industry leader in trying to position EasyJet for this new world. The airline couldnt simply abandon it without jeopardizing any chance of a quick recovery when the crisis ended.Lundgren also thought the contract made long-term strategic sense. Such lower costs benefit EasyJet initially as innovation is rewarded. Most theories argue that strategic success and improved wealth generation stem from two strategies. Powered and implemented by Interactive Data Managed Solutions. At the same time, it was wooing at least some business travelers by differentiating itself from no-frills rivals like Ryanair and Wizz, offering some perks and serving first-tier airports. 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. Now, more than a year later, with the pandemic still raging, and with many countries, including the U.K., having toughened travel restrictions in response to new strains of the virus, the airline industrys hopes for an early recovery are descending faster than an Airbus A320 on final approach to EasyJets home base at Luton Airport. It can restore the reputation of a brand. Haji-Ioannou insinuated that this was evidence of the corruption hed long alleged. That loan would buy EasyJet some more time. The company has announced plans to reduce its 15,000-person workforce by 30%. A prime example of this was the subsequent takeover of Go by EasyJet. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. The company carries out FORTUNE may receive compensation for some links to products and services on this website. Consumers are optimistic and the travel and tourism industry are now booming again. Barton, EasyJets chairman, tried to put the episode behind the company, saying publicly that he hoped EasyJet could reengage constructively with its founder, but that the negative headlines and publicity has placed unnecessary pressure on a dedicated management team and negatively impacted the reputation of this great British and European brand. Indeed,though Lundgrens management team had won the showdown, there were signs of damage. Adjust your investments to WebeasyJet is aiming to become the worlds most data-driven airline. 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. 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 management of the element of working capital. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. This will provide an evaluation of the external business environment in which the company operates. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. 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. All airline companies within the industry will have similar value chain, which will include activities such as obtaining fuel, designing fare structures, airport facilities, developing co-operative agreements, and providing customer service. The threats are in terms of fines and rise in cost of raw materials. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. When rival European budget carrier Air Berlin went belly up in 2017, Lundgren spent$48 millionto buy its operations at several German airports and take on 25 of its airplanes. Market Development. Porter explains that there are five forces inherent in a market, which will jointly determine the intensity of competition and profitability of EasyJet and the airline industry. These risks may include: Shifts in consumer demand and preferences. In fact, Haji-Ioannou continued to press his allegations that corruption underpinned the Airbus contract, raising the matter at EasyJets general meetings in July and December. 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. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. Managing for value involves managing both value activities and cost drivers. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. 3. Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. Still, it wasnt spared from the industrys general carnage. However, if EasyJet could significantly differentiate its service over its competitors then it could obtain higher prices. 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. EasyJet came into the pandemic in better shape than many airlines: It was profitable and had a strong balance sheet, with relatively low levels of debt. Value chain analysis can provide important insights into what management need to focus on strategically. 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. 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. As a budget airline focused exclusively on short-haul flights within Europe, it had more flexibility than long-haul carriers to adjust its flight schedule, canceling flights without worrying about losing connections or violating alliance agreements. Meanwhile, the U.K. has announced international travelwill resume as of May 17, but willoperate according to a traffic light system, with arrivals from red-, yellow-, or green-designated countries subject to different requirements. Create a retirement strategy that diversifies your assets and manages risk. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. The sales process is efficient, as EasyJet sells directly to customers, instead of using external sales teams. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. 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. 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. Noting that EasyJet had failed to say exactly how the deferral affected EasyJets cash burn, the founder said that EasyJet might have engaged in market manipulation by failing to disclose such details and by using overly optimistic forecasts for when the companys revenues and profits might recover. This strategy is focused on keeping costs down and EasyJets policy of no free lunch and efficient use of airports by limiting turnaround to 30 minutes. Therefore, the low cost strategy is the ideal strategic fit to its environment. In April 2020, EasyJet announced that it had reached an agreement with Airbus to defer delivery of 24 of the aircraft, meaning it would take on no new aircraft in 2021. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. Finally, opportunities may also exist in the area of innovation and alliances, how about a joint venture scheme with Ryanair to maintain and enforce the low cost competitive advantage. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. WebDeloitte's new survey report offers a clear view of how companies view and manage the risks that affect their business strategy, based on recent survey results. But what are the internal weaknesses suffered by EasyJet? Most of Europe was in the yellow category, requiring 10 days of self-isolation when coming back, and with the U.K. government still advising against leisure travel. 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. And they are relentlessly focused on keeping per-seat costs down. 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. If you need assistance with writing your essay, our professional essay writing service is here to help! 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. Yet Lundgren says his strategy is still valid, telling trade publication Travel Weekly that holidays are going to lead the recovery. Liberum analyst Khoo says the move into packaged holidays made strategic sense. Objectives To assess the psychological distress, anxiety, depression, coping strategies, It is also anticipated that Ryanair will continue to lower costs, which will allow it to continue to engage in a price war, by lowering fares aggressively. The website features a map of the world that displays a small airplane icon for every flight in the air, based on radar and transponder data. If your specific country is not listed, please select the UK version of the site, as this is best suited to international visitors. To what extent does EasyJets concentration on A classically trained trombone player who has said he went into business only because he failed to get into Londons Royal Academy of Music, he said he hadnt been playing his instrument lately because I dont have the inspiration for it. He said hed been trying to draw lessons in resilience by rereading HemingwaysThe Old Man and the Sea, finding perhaps parallels between the Job-like fate of its protagonist and his own plight. 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.. This results in high levels of asset utilisation and reduced unit costs. Hannibal HanschkePool/AFP via Getty Images, Christoph SoederPicture Alliance via Getty Images, Chris RatcliffeBloomberg via Getty Images, one of the biggest winners in the European air-travel dogfight, agreed in January 2020 to deferred prosecution agreements, began purchasing carbon offsets for the CO2 of all its flights, might not fully recover from the pandemic until 2024, LinkedIn has officially entered its cringe era, and its working. But the training center is the only part of EasyJets operation at Gatwick still humming. The idea of remote working can also result in co-ordination and control weaknesses. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. Significant investment in assets and managing financing costs. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. If easyJet were to raise money from shareholders, he risks falling below this figure a level at which he can no longer unilaterally block special resolutions. Technological Factors. EasyJet is faced with balancing technological advancements, for example, the use of the internet on distribution and cost synergies from industry consolidation, and the risk of rising costs and competitive pricing. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. This is done in order to maximise the yield from a flight, as many of the costs associated with running a flight are fixed relative to the number of passenger on board. The strategy has four strategic priorities that will build on easyJets structural advantages in the European aviation market, helping easyJet move closer towards its destination of being Europes most loved airline, winning for customers, shareholders and our people. Given the fact that the company offers Focusing on improving the control and decision making across operations. Front and center was the existential risk of the coronavirus. The increase growth of world tourism will offer opportunities in terms of undertaking joint venture with local/foreign travel companies; hence, Going places and Thomas Cooke are already providing such services to growing number of holidaymakers each year. This has the highest risk, but Whats more, it included maintenance and avionics support for EasyJets existing fleet. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. 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. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. Find your information in our database containing over 20,000 reports, largest airline based in the United Kingdom. easyJet's updated framework continues to build on its competitive advantages - an unparalleled network and market positions, efficient low cost model, well-known brand and strong balance sheet - positioning easyJet to deliver sustainable and disciplined growth and returns for shareholders. easyJet will maintain its advantageous cost position through continued cost action. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. Background Coronavirus disease-19 emerged in December 2019. Supported by innovative and effective advertising. Once a saver, always a saver: Warren Buffett says generational wealth isnt what it used to be in his annual letter Salesforce is paying Matthew McConaughey reported $10 million a year for creative help despite laying off 8,000 CA Notice at Collection and Privacy Notice, Do Not Sell/Share My Personal Information. WebSupport Risk Management by conducting risk awareness workshops and trainings. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. Kotze compared Lundgren to his rival CEO, Michael OLeary, who runs Ryanair and has a reputation for being merciless at containing expenses and being generally combative. Accepting this fact and having a strategy in place to mitigate risk is critical to being a successful innovator. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. All office-based employees are encouraged to dress casually. 6. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. The customers of EasyJet have been using the Internet for making bookings. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Also, only one type of aircraft is used, in order to minimise maintenance costs. But at the same time, Haji-Ioannou and his family sold off a portion of their shares, bringing their total holdings to less than 27% of the company by May 2020. The concept of the value chain is particularly useful in understanding an organisations strategic capability since its concentrates on value activities and the linkages between activities rather ran just resources. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. Continuing to deliver strong productivity, easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, Additional ESG information - Financial Year 2021, Directors' interests and substantial interests. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. data than referenced in the text. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. EasyJet, on the other hand, flies fewer routes but operates from many more primary airports, with a heavier focus on Western Europe. Facebook: quarterly number of MAU (monthly active users) worldwide 2008-2022, Quarterly smartphone market share worldwide by vendor 2009-2022, Number of apps available in leading app stores Q3 2022. Statista assumes no It is here that EasyJets pilots practice and maintain their skills. Haji-Ioannou founded EasyJet in 1995, eventually using it as a springboard to create of an Easy-branded empire that extended from car rentals and pizza delivery to a hemp business. As a result, EasyJet occupies a kind of middle groundin both pricing and costsamong European carriers. 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