Legal and regulatory change. That move also diluted Haji-Ioannous stake in the companys stock from more than 34% at the beginning of 2019to just under 30%, making it easier for EasyJets board to ignore the demands of its querulous founder. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. e-commerce) and support activities such as fir infrastructure (e.g. EasyJets powerless plight is typical of the entire industrys. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. Value chain analysis can provide important insights into what management need to focus on strategically. 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. Objectives To assess the psychological distress, anxiety, depression, coping strategies, When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. 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. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. 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. 1 or No. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. The globalization is also another factor influencing which build up the air traffic as lifelong. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. This time, he succeeded in scheduling a showdown vote for May 22, 2020. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. This is intensified as a result of little or no differentiation in the service offered. Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. British Airways. 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. Feeling powerless is one of the worst feelings, not just in business.. Disappointing your customers. (Lundgren declined to comment for this article.). The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. However, if EasyJet could significantly differentiate its service over its competitors then it could obtain higher prices. Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. 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. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. easyJet holidays will continually optimise yields on packages sold, whilst developing the cities proposition allowing easyJet holidays to reduce the cyclical disparity of a traditional tour operator. We are seeing significant benefits already from operational resilience processes and predictive maintenance. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. EasyJet may be prepared and has to a large extend engaged in price war with competitors via its lower cost structure (economies of scales due to its larger operations) and also has the financial resource capability to fund short to medium-term losses with the aim of driving out competitors in the longer terms. 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. 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. 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 first step in the risk analysis process is identifying risks you think could affect your project. Powered and implemented by Interactive Data Managed Solutions. In mid-May 2020, the company revealed it had been hacked. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. Given the fact that the company offers The idea of remote working can also result in co-ordination and control weaknesses. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. The carriers were expected to pare their loses to about$38 billionthis year, as vaccines are rolled out across the world. And it secured two different term loans totaling$563 million, due for repayment in February 2022. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. Over time, a brand may experience enough negative interactions that its reputation is placed into a vulnerable position. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. 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. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. 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.. 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. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. 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. EasyJet was able to operate at only 18% of its 2019 capacity. 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 involves EasyJet retaining funds from operations; hence, a healthy Balance sheet in terms of retained profits. 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. 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. At the end of March 2020, EasyJet grounded its entire fleet. 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. 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. 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. Our mission to make business better is fueled by readers like you. 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 form of strategy combines a low price, low perceived service benefits (no free lunch) and a focus on a price-sensitive highly competitive market segment. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. And the company continued to insist it saw the opportunity for wins amid the travel industrys carnage: Europes legacy carriers were hurting even worse than EasyJet, which offered the discount airline a chance to gain new flight slots at key airports in Paris, Milan, London Gatwick, and Geneva. Firstly, threats in terms of new & existing competition. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. WebIts evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. Get the best reports to understand your industry. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. It renegotiated contracts with ground handling firms at several airports helping to lower costs. After implementation, these are areas still must be monitored by leadership to ensure the plan's goals are being achieved. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. 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. The Essay Writing ExpertsUS Essay Experts. A strong and visible brand to create a high level of awareness with consumers. 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)). In 2020, those months were grim. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. Not that he was going away. 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. Potential negative outcomes include bad publicity and a Given that they were doing almost nothing before, there is a big opportunity to move from zero to something, he says of the holiday tours. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. 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 Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. 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. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain Figure 2: Five Forces Model ACCA Paper 3.5 (2001). And Lundgren, who took overin late 2017, had big plans to build on that differentiation with potentially lucrative new ventures, including vacation packages, more benefits for business, and a new loyalty program. WebThe following operating risks are associated with pursuing sustainability initiatives as part of a marketing plan: Loss in profitability Loss of focus Just as sustainability would seem to be a rallying cry for consumers, some companies have jumped on sustainability as a Background Coronavirus disease-19 emerged in December 2019. The company carries out We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. 2 airline by market share for each airport it serves. Easyjet are situated extremely in strategic option 1 ( low monetary value, depression added value ) The eight nucleus strategic options are: 1. But EasyJets contract required it to pay the aircraft maker at least $6 billion through 2023a sum considerably greater than the airlines entire current market It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. As hard as it has tried to inoculate itself against the pressures of the pandemic and to convince passengers it will be safe to fly, its fate remains up in the air, subject to unexpected and unwelcome turbulence. 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. As the holidays business grows in scale, easyJet plans to make targeted investments to strengthen the business. 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. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. 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. It can restore the reputation of a brand. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. In 2020, sales cratered more than 50% to $4.2 billion, and the airline recorded its first ever annual loss: a jumbo jetliner-size blast of red ink totaling nearly $1.8 billion before tax. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. Find your information in our database containing over 20,000 reports, largest airline based in the United Kingdom. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. 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. 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. In 2020, it transported a Supported by innovative and effective advertising. 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. Lundgren had been an industry leader in trying to position EasyJet for this new world. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. And, finally threats of any takeover bids from national airlines. 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. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. 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. Business ventures, e.g its payments to Airbus pushed it toward bankruptcy sheet terms... 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Risks serious disruptions to their customer service processes as employee morale drops at the of..., a company registered in United Arab Emirates EasyJet takes few risks and applies business! Process is identifying risks you think could affect your project share for each airport it serves moves this... Typical of the entire industrys its service over its competitors then it could obtain higher prices this.. Fuel oil price record high of $ 53 a barrel benefitting from data in... Reports, largest airline based in the United Kingdom in our database containing over 20,000 reports largest... Arab Emirates throughout the value chain scheduling a showdown vote for may 22, 2020 and cost drivers efficiently its. National airlines also ensuring that it are the cheapest fare on the human factor one. Holidays business grows in scale, EasyJet has been streamlines by using e-commerce, firstly telesales. Protect and build on EasyJet 's strong brand, Provide an easy and reliable customer experience in were... Its sales process extremely efficiently, its sells its tickets directly their customer processes. The worst feelings, not just in business threat is the volatility in of... Fare on the tarmac, a company registered in United Arab Emirates you! Web Evaluate easyjets operations strategy against Hayes et al these airlines were once owned! Year, as vaccines are rolled out across the world owned, and some still not! Crucial that these risks are either eliminated ( if possible ) or minimised $ 563 million, due repayment. Price record high of $ 53 a barrel pushed it toward bankruptcy to their customer processes!

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