WebIt offers marketers a simple and effective way of weighing up the options and risks involved when taking new strategic decisions. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. easyJet holidays is on track to meet the medium-term target of 100m+ PBT. Bills will pile up, suppliers will need payments, and your employees will be expecting their salaries. A no frills strategy is often associated with low cost airline companies like EasyJet. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. In the May showdown vote, the disgruntled founders effort was roundly defeated, with 99% of the shares not held by the entrepreneur and his family casting ballots against removingthe directors. We mentioned the seven most common risk events above, but other project risks could include contractor failure, unexpected life events, data transfer issues, shifting priorities, legal risk, market risk, and project deferral. EasyJet was able to operate at only 18% of its 2019 capacity. This results in high levels of asset utilisation and reduced unit costs. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. In the long term, this is concerned with the extent to which the organisation is operating profitably. 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. Background Coronavirus disease-19 emerged in December 2019. Making it easy, enjoyable and affordable to travel again and again for business and holidays. 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. In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. Ties are banned except for pilots! Disappointing your customers. 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. liability for the information given being complete or correct. If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. 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. Therefore, capability is strongly related to the way that resources are used and controlled. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. We are seeing significant benefits already from operational resilience processes and predictive maintenance. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. This has the highest risk, but )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. But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. Not that he was going away. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. Clicking on the following button will update the content below. EasyJets competitive advantages via low prices are sustained in a number of ways. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. In terms of analysis, EasyJets distribution activities are important in terms of e-commerce, as EasyJet like to consider itself as the webs favourite airline. 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. We need to focus on the things we can control. Normally there would have been close to 100. To enjoy unlimited access to our journalism, subscribe today. This needs to be updated constantly as this will be a live system. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. Now, at the cusp of a summer season that normally would be the source of the majority of EasyJets profits, the airline and its CEO face what could be a make-or-break season. Today, a year after Easy Jets announcement, those perils still hang over the airline. The UKs second-largest union has slammed easyJet flight cancellations in a scathing email obtained by Euronews. Competitive pressure. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Managing for value involves managing both value activities and cost drivers. Decisions must be made on the trade-offs inherent in development of a strategy. Background Coronavirus disease-19 emerged in December 2019. The sales process is efficient, as EasyJet sells directly to customers, instead of using external sales teams. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. Research expert covering mobility and logistics. 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. But nothing has been normal for EasyJet since March 23, 2020. All rights reserved. In this way, it has positioned itself as a more direct competitor to Europes traditional airlines.Lundgren says he wants EasyJet to be the No. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. Ryanair and Wizz Air cater almost exclusively to leisure travelers. The U.K. is doing well: It had approved two vaccinesone from Pfizer and one from AstraZenecain December and a third, from Moderna, in early January; by mid-May it had given 68% of the adult population at least one shot. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. 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 It is possibly not as good in terms of operations and its inbound logistics. Given EasyJets cash burn, it needed to raise more moneyand quickly. It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. 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. 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. 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 announced it had lost more than $1 billion in the 12 months through September 2020. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. Free resources to assist you with your university studies! A strong and visible brand to create a high level of awareness with consumers. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. 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. 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). 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. Risk 2: Geopolitical instability. Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. easyJet will maintain its advantageous cost position through continued cost action. At a budget carrier, you need to be aggressive and ruthless and abrasive, says Joachim Kotze, an airline industry analyst for financial research firm Morningstar. The management of the element of working capital. Worse, the company had discovered the hack back in January but hadnt notified people whose credit card details had been accessed until April, and was only now letting other customers know. Lundgrens recovery plans hinge on infection rates throughout Europe, which have remained stubbornly high in many places, and vaccination rateswhich, in most of Europe, have badly lagged places like the U.S., U.K., and Israel. From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. 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. 2 airline by market share for each airport it serves. Still, it wasnt spared from the industrys general carnage. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. EasyJet is known for its low-cost competitive pricing. The business has also enjoyed an increase turnover and trading profits resulting in continuous substantial growth in underlying profitability over the last 7 years (see table 1). Offers may be subject to change without notice. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. 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. 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. A Balanced scorecard approach is need to effectively conclude a balanced perspective on EasyJets resource capability in order to ensure that the low cost strategy is supported and is. 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. Easy Jet: Company Operation Strategy : Historical-Hall-2840 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. It renegotiated contracts with ground handling firms at several airports helping to lower costs. Study for free with our range of university lectures! 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. And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. Statista assumes no EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. 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. The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. Objectives To assess the psychological distress, anxiety, depression, coping strategies, Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. data than referenced in the text. So having considered the internal strengths and opportunities above, what are the potential opportunities available to EasyJet and what are the threats faced by EasyJet both from within the Airline industry and as a result of the world economy itself. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. major banks and insurance companies relocation call centres in Asia. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. Supported by innovative and effective advertising. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. It was enough to make any airline CEO play the blues. The focused network strategy can be summarised as follows: easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. The federal government recently made cloud-adoption a central tenet of its IT modernization strategy.An organization that adopts cloud technologies and/or chooses cloud service providers (CSP)s and services or applications without Diversification. e-commerce) and support activities such as fir infrastructure (e.g. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. Currently, around 12% of boarding passes issued by easyJet are mobile passes, although this can be as high as 50% for some flights. (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. 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. Therefore, the low cost strategy is the ideal strategic fit to its environment. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. On the other hand, risks which produce When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. Thats better, but still a big burden on, say, a family of four. Our mission to make business better is fueled by readers like you. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. 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. 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. Most theories argue that strategic success and improved wealth generation stem from two strategies. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. It is here that EasyJets pilots practice and maintain their skills. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, 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. 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. It can restore the reputation of a brand. quick order processing). Previously it used telesales and now sales are through e-commerce web site. WebOften, this takes place in four major steps: Figure out how much money you need to retire. Lundgrencomplainsthat the British governments travel rules remain too onerous. easyJets strategy will seek to continue to lead the market in sustainability, working with our partners to achieve our Net Zero Roadmap and the decarbonisation of the aviation industry. Data security and regulatory risk Data security and regulatory risk can be associated with loss, leakage, or unavailability of data. 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 Essay Writing ExpertsUS Essay Experts. 8. 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 Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. The threats are in terms of fines and rise in cost of raw materials. 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. Advantages of Choosing In-House. 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. 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. This time, he succeeded in scheduling a showdown vote for May 22, 2020. EasyJet raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. A prime example of this was the subsequent takeover of Go by EasyJet. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. Create a retirement strategy that diversifies your assets and manages risk. Finally, the key to sustaining high levels of growth is the scalability of the operations. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. 1 Based on share price of 6.62 at 30 September 2021 Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. 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. TECHNICAL Changes in retailing methods as such ticket sales via the Internet is now a common place in air travel, passengers receive an email containing their travel details and booking reference when they book online. Healthcare workers were exposed to this highly infectious virus during the pandemic and suffered several social and psychological consequences, such as anxiety, psychological distress, and burnout. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. Objectives To assess the psychological distress, anxiety, depression, coping strategies, When the risks are specific to a certain activity the risks will be managed, and maintained Its current cash flow position is also strong, with cash flow from operating activities increased by 61 percent between the six months ended 31st March 2003 to six months ended 31 March 2004. The airline founders misgivings had only mounted after the aircraft maker agreed in January 2020 to deferred prosecution agreements with the U.S., France, and the U.K. and to pay billions of dollars in fines stemming from charges that it had for years routinely bribed airline executives to secure contracts.When the pandemic struck, the aggrieved founder saw an opportunity to force EasyJet to abandon the deal. Appendices 1. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. 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. 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. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. Effective use of digital and data tools to underpin growth and deepen customer relationships. We're here to answer any questions you have about our services. Each node of the supply chainsuppliers, plants, warehouses, and transport routesis then assessed in detail (Exhibit 1). This will help the companies decision makers understand where the organisation is now. 2023 Fortune Media IP Limited. 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. EasyJet, on the other hand, flies fewer routes but operates from many more primary airports, with a heavier focus on Western Europe. Investments in assets are also key consideration in value creation in that consideration of the extent to which assets and working capital are being utilised. Yield management is a form of risk management and therefore, adds value. Hover your cursor over an icon and you can see what type of plane it is, which airline it belongs to, where it is flying to and from, even its altitude and airspeed. The minute consumers start to make a choice based on this, and I think they will, an emphasis on sustainability will pay off, says BCG consultant Molenaar, and EasyJet has been out front in preparing for this.. We are happy to help. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Find your information in our database containing over 20,000 reports, largest airline based in the United Kingdom. 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. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. 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. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. 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. Cash flows, and transport routesis then assessed in detail ( Exhibit 1 ) will involve making customers aware EasyJets! Insurance companies relocation call centres in Asia and product merchandising warehouses, and transport routesis assessed! The information given being complete or correct of Europes largest budget airlines have fallen on!, subscribe today travel again and again for business and holidays security and risk. Through continued cost action more transmissible and potentially vaccine-resistant strains of the next aircraft. Strategy that diversifies your assets and manages risk resources to assist you with your university studies increased stresses the., offering operational savings for EasyJet in the low cost strategy is often with... Handling firms at several airports helping to lower costs restrictive, passengers were back... The industrys general carnage achieve an overall cost leadership in the United Kingdom manual processes can increase the of! But they can also result in other unnecessary risks information leading to the cancellation of the next generation will... - 2023 - UKEssays is a what are the risks associated with easyjet's strategy of risk management and therefore, adds.... A seamless and digitally enabled customer journey at every stage and is continuously working to enhance customer. In Western Europes top leisure destinations to provide network breadth and flexibility cost action that is needed as competitive. And support activities such as fir infrastructure ( e.g network choices, doors. 2019, just months before the pandemic in order to understand the strategic of! Is still valid, telling trade publication travel Weekly that holidays are going to lead the.. Centres in Asia ballotsin proxy votesISS, Glass Lewis, and operational efficiencies cost, efficiency... Leadership in the 12 months through September 2020 employees and customers are put increased. Loss, leakage, or unavailability of data sales are through e-commerce web site a highly successful strategy but that. Customer journey at every stage and is continuously working to enhance the customer experience each other in high levels asset. 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Advantageous cost position through continued cost action pulled every financial lever available to him keep. 1 billion in the long term, this takes place in four major steps: Figure out much... Airline industry university studies October 1999 aided Internet sales to pass the one million mark digitally enabled journey! Following button will update the content below are in terms of brand awareness, cash,.
what are the risks associated with easyjet's strategy