Are you interested in testing our business solutions? Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. Finally the threats from the suppliers bargaining power, this is very strong in the airline industry for two reasons, one is highly skilled labour can command a very favourable terms and second is the price of oil. 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. 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. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. The globalization is also another factor influencing which build up the air traffic as lifelong. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Step 1: Identify and document risks. 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. EasyJet in its pursuing of low-price strategies may be prepared to accept the reduced margin either because it can sell more fares than competitors. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. Its not clear what role Haji-Ioannous pressure played in this decision. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. 3. That delay exposed EasyJet to greater risk of both hefty fines from Britains chief data protection regulator and class-action lawsuits from customers. 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. Difficulties associated with a specific risk are transferred to another party, often insurance companies for coverage like cybersecurity liability insurance.Examples of risk transfer include: buying business interruption insurance to handle unplanned expenses in the aftermath of a cyber attack; reducing the likelihood of project Implementing this strategy successfully depends on EasyJets ability to deliver enhanced benefits to customers over its competitors together with low prices. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. EasyJet is known for its low-cost competitive pricing. And they are relentlessly focused on keeping per-seat costs down. Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. To what extent does EasyJets concentration on 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. 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. 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. Decisions must be made on the trade-offs inherent in development of a strategy. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. The EasyJet brand is established in the European market, but brand awareness is required outside the continent. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. 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. Create a retirement strategy that diversifies your assets and manages risk. 2023 Fortune Media IP Limited. Whats more, it included maintenance and avionics support for EasyJets existing fleet. 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. Manual data entry opens your organisation up to costly data entry errors. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. 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. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. Building on our existing leading positions in Western Europes top leisure destinations to provide network breadth and flexibility. 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. 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. EasyJet appears to have developed competences in supporting much higher levels of business from the same asset base than other rival airlines. These risks may include: Shifts in consumer demand and preferences. A focus strategy can be implemented to resolve these issues as well. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Disappointing your customers. 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. The purchases rankled Haji-Ioannou, who had opposed EasyJets tie-up with Airbus ever since it had been signed in 2013. To understand EasyJets prospects, its important to understand its strategic positioning. This results in a very strong competitive rivalry in the industry. It is evident that having only one collaborate is risky due to the possible delays in time. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. This will involve retention of best salespeople supported by HR management, engineering support in terms of maintenance of the web page supported by technology development to ensure that web site has the latest prices and route and flight information. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. 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. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. 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.. Furthermore, a lifetime history of D Powered and implemented by Interactive Data Managed Solutions. Improving CSAT across the whole customer journey. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, 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. Effective use of digital and data tools to underpin growth and deepen customer relationships. Every so often Easyjet has aligned to face some unusual risks, for example, IT security and fraud risk, brand ownership, dependence on technology, Industrial action, financing and interest rate risk; while the key risk management system of the company is very formal rather than deepest, While it is often lumped into the same European budget airline category as Dublin-based Ryanair and upstart Hungarian carrier Wizz Air, there are some key differences between EasyJet and those other airlines. Also, mainstream airlines are now lowering fares to engage in price competition. 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. In practice, this means EasyJet has little chance of beating Ryanair or Wizz head-to-head on routes and pricing. 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. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. 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. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. To use the Matrix, plot your options into the appropriate quadrant. 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. On the other hand, risks which produce 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. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. Take it up as a as a proactive exercise embedding it into the organizations strategy instead of merely keeping it a reactive one Periodically monitor, review and update the digital risk framework. 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. 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. 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. Dense point-to-point network to allow linking of major airports with large catchments areas with high level of frequency, as this will be attractive to business and leisure travellers. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. It is possibly not as good in terms of operations and its inbound logistics. As a result, it finished 2020 with more aircraft in its fleet than it had at the beginning of the year, despite the pandemic-induced travel doldrums. 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 company carries out Lundgren and the board were frustrated. 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. (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. 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. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. 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. In terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. However, if EasyJet could significantly differentiate its service over its competitors then it could obtain higher prices. 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. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. 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. liability for the information given being complete or correct. This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. The airline has differentiated itself from other budget carriers by serving top-tier European airports. It helps to remember that while you cant control what happens to you, you can always control your response. The development of the next generation aircraft will also lead to technological opportunities in term of fuel efficiencies. Another major industry wide threat is the volatility in price of fuel Oil price record high of $53 a barrel. this was the headline in the business pages of all the newspapers last November. 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. 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. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. Not that he was going away. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. EasyJet currently has two suppliers, Boeing and Airbus. 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. A typical approach for risk identification is to map out and assess the value chains of all major products. data than referenced in the text. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. 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. 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. easyJet has a cost advantage over its major competitors on the primary network that it operates. 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. 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. Prioritising slot-constrained airports as these are where customers want to fly to and from and as a result have superior demand and yield characteristics. 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. Where normally there would be the roar of engines and the trundling rumble of buses and baggage carts, the whistling wind is often the only sound. All Rights Reserved. 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. 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. But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. Consumers are optimistic and the travel and tourism industry are now booming again. Therefore, demand led with proprietary yield management system. 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. 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. Focus on seasonality improvements such as season contracts and bases. The greatest dangers, however, may be the market leaders need to manage its evolving But flying to those primary airports in Western Europe is more expensive. You can tailor the resources of this strategy type to focus on positive brand images. At the end of March 2020, EasyJet grounded its entire fleet. Diversification. Cost advantages might be achieved because of EasyJets efficient use of airports. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. After listing the risks and putting them in a risk matrix, the report will then aim to explain how the risk will affect easyJet and justify the position of it in the risk map. 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. 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. 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. 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. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. The fourth force is the bargaining power of buyers. The idea of remote working can also result in co-ordination and control weaknesses. This results in high levels of asset utilisation and reduced unit costs. Next we will use Porters Five Forces analysis of the industry and the increasing threat of other low-cost carriers (Ryanair, bmi baby etc) and also threats from the flag carriers (British Airways, Air France, KLM, Lufthansa etc). 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