As Internet transactions have a lower cost associated with it EasyJet encourages its customers to book on-line by offering them a discount for on-line ticket reservations. 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. Step 1: Identify and document risks. 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. 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. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. 6. 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. 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. The attackers stole more than 9 million customers e-mail addresses and travel details and also accessed credit and debit card details of more than 2,200 customers. 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)). 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. 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. Powered and implemented by Interactive Data Managed Solutions. As the holidays business grows in scale, easyJet plans to make targeted investments to strengthen the business. Product Development. 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. Haji-Ioannou also alleged three large minority EasyJet shareholdersthe asset management companies Invesco, Phoenix Asset Management, and Ninety Onewere straw men, secretly controlled by Airbus, since all three companies manage some of the aerospace giants employee pension assets.But, in the end, Haji-Ioannous campaign failed to catch fire with other investors. Get in touch with us. The company has announced plans to reduce its 15,000-person workforce by 30%. easyJet will maintain its advantageous cost position through continued cost action. EasyJet was able to operate at only 18% of its 2019 capacity. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. 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 As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. With Ryanair maintaining high margins despite reducing yields through strict cost management. 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. 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. The pandemic, of course, wiped out business and leisure travel alike. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. 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. Disappointing your customers. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. easyJet has refined its strategy to drive our purpose of making low-cost travel easy. It now owns just over half its fleet, down from 70% in 2019and six of every 10 planes it does own have been pledged as collateral against its loans. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain The threemost prominent firms that advise shareholders onhow to cast ballotsin proxy votesISS, Glass Lewis, and Pircall recommended against backing his proposals. WebSome compliance risks are specific to an industry or organizationfor example, worker safety regulations for manufacturers or rules governing the behavior of sales representatives in the pharmaceutical industry. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. 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. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. Normally there would have been close to 100. It hoped these measures allow the public to feel confident flying again. 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. WebeasyJet is aiming to become the worlds most data-driven airline. 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. 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. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. 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. 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). Free resources to assist you with your university studies! This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. major banks and insurance companies relocation call centres in Asia. 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. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. 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. These large airline groups are so big and so important for so many economies that the national governments will do whatever they can to keep them alive, saysDirk-Maarten Molenaar, atravel and tourismindustry consultant at Boston Consulting Group. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. They have focused on expanding into new markets in Eastern Europe. We are happy to help. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. easyJet holidays is on track to meet the medium-term target of 100m+ PBT. And they are relentlessly focused on keeping per-seat costs down. Supported by innovative and effective advertising. Undertaking market shift to globalisation expanding outside the European market will be key to continuous enhancement of business performance. Overall the analysis will highlight the inherent threats and weaknesses suffered throughout the industry, and also the importance of innovation to maintain low cost advantage, alliances and size to success. e-commerce) and support activities such as fir infrastructure (e.g. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. The idea of remote working can also SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. Currently, around 12% of boarding passes issued by easyJet are mobile passes, although this can be as high as 50% for some flights. Managing for value involves managing both value activities and cost drivers. Making it easy, enjoyable and affordable to travel again and again for business and holidays. The globalization is also another factor influencing which build up the air traffic as lifelong. 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. Continuing to drive product conversions by improving the way ancillaries are sold and product merchandising. So when the industry was slammed by COVID-19, government was responsive to pleas for help. The type of childcare had little impact on infection risks. Its not clear what role Haji-Ioannous pressure played in this decision. The company carries out Its also hard to monitor the performance of each individual. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. 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. The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. 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. 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 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. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments. 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 The carriers were expected to pare their loses to about$38 billionthis year, as vaccines are rolled out across the world. On the other hand, risks which produce Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. A focus strategy can be implemented to resolve these issues as well. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. Legal and regulatory change. In a vast hangar on the outskirts of Gatwick Airport, one of EasyJets big hubs, sit a row of five space-age pods, painted in EasyJets trademark orange-and-white colors. Increasing automation driving self-service capabilities for customers. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. EasyJet also enjoys internal strengths in its operations in terms of efficient use of airports by reducing turnarounds to 30 minutes and below, EasyJet can achieve extra rotations on the high frequency routes. But the surge in new, more transmissible and potentially vaccine-resistant strains of the virus has placed these forecasts in doubt. In 2020, it hemorrhaged the same amount. 1 Based on share price of 6.62 at 30 September 2021 3. ENVIRONMENTAL The energy sources used, namely oil has vast ecological/environmental implications. After overcoming the many hurdles of producing a model with a viable context and associated risk factors, often the user of the innovation is neglected. He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. An important part of easyJets strategy is to operate a modern fleet and based on the current business model, EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. WebThere is one main reason which influences these economic factors is the recession in the Easy jet. And finally, service, activities that ensure that customers enjoy their flight by providing friendly on board service and assisting traveller with any special needs requirements. 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. It is here that EasyJets pilots practice and maintain their skills. 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! Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. Those airlines are more dependent on business travel, which many analysts forecast might not fully recover from the pandemic until 2024if it ever recovers at all. Having fought off Haji-Ioannou, Lundgren and EasyJets C-suite faced other foes they couldnt control. Feeling powerless is one of the worst feelings, not just in business.. Many full-service airlines are locked into hub-and-spoke flight networks that limit their scheduling flexibility, BCGs Molenaar says. Do you have a 2:1 degree or higher? 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. Balance your retirement plan with your other financial goals. 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. 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. 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. Whats more, it included maintenance and avionics support for EasyJets existing fleet. 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. Some wondered if Lundgren, who has a reputation for being a nice guy, had the stomach for the kind of aggressive cost cutting thatrunning a budget airline, especially during a pandemic, demanded. This has the highest risk, but 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. 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. All work is written to order. 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. 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. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. 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. The greatest dangers, however, may be the market leaders need to manage its evolving But what are the internal weaknesses suffered by EasyJet? Although mostly private now, many of these airlines were once state owned, and some still have not insignificant government stakeholdings. Not that he was going away. 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. EasyJets competitive advantages via low prices are sustained in a number of ways. 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. What happens to EasyJet, which had been one of the strongest players in the airline industry before COVID-19, could presage the entire sectors fate: If EasyJet cant come back strong, what airline can? These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. 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. The first step in the risk analysis process is identifying risks you think could affect your project. Savings made from e-commerce is another source of value creation. 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. Lundgren had been an industry leader in trying to position EasyJet for this new world. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. 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. Looking for a flexible role? Finally, the key to sustaining high levels of growth is the scalability of the operations. 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. 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. Lundgren and the board were frustrated. Web Evaluate EasyJets operations strategy against Hayes et al. s criteria of consistency and contribution to competitive advantage. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. Developing the range of ancillaries on offer such as the Inflight retail proposition. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. 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