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. However, if EasyJet could significantly differentiate its service over its competitors then it could obtain higher prices. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. POLITICAL Following the European deregulation of commercial aviation, a fleet of low cost carriers are reshaping the local airline landscape. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. If COVID doesnt ease more quickly, and leisure travel doesnt rebound as hoped,EasyJetshole will only get deeper, and its plans to grow could be spiked indefinitely. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. Also, mainstream airlines are now lowering fares to engage in price competition. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. 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. 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. This enables easyJet to be efficient with network choices, with an emphasis on maximising returns. 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. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Lundgrencomplainsthat the British governments travel rules remain too onerous. Objectives To assess the psychological distress, anxiety, depression, coping strategies, British Airways. Taken together, those restrictions mean that summer 2021 is looking increasingly in doubt. 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. 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. 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. Advantages of Choosing In-House. Not that he was going away. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. 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. The airline has differentiated itself from other budget carriers by serving top-tier European airports. *You can also browse our support articles here >. Do you have a 2:1 degree or higher? Increasing automation driving self-service capabilities for customers. On the other hand, risks which produce Our mission to make business better is fueled by readers like you. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. EasyJet is known for its low-cost competitive pricing. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. Accepting this fact and having a strategy in place to mitigate risk is critical to being a successful innovator. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. Supported by innovative and effective advertising. 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. Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. data than referenced in the text. It is also anticipated that Ryanair will continue to lower costs, which will allow it to continue to engage in a price war, by lowering fares aggressively. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. 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. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. Implementing this strategy successfully depends on EasyJets ability to deliver enhanced benefits to customers over its competitors together with low prices. 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. 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. Front and center was the existential risk of the coronavirus. To enjoy unlimited access to our journalism, subscribe today. Please do not hesitate to contact me. 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. This has the highest risk, but The value chain analysis will show the total value added by the airline industry and EasyJet. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. Are you interested in testing our business solutions? Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. To understand EasyJets prospects, its important to understand its strategic positioning. easyJet has a cost advantage over its major competitors on the primary network that it operates. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. 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. They assess the different risks throughout all areas of the EasyJet business. The world economy is however, now on the up post September 11th. Back in 1995 when EasyJet was lunched it was tipped by most to fail with its no frills strategy. The idea of remote working can also This needs to be updated constantly as this will be a live system. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. EasyJet may be especially good at outbound logistics lined to its marketing and sales operations and supported by its technology development. 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. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. 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 most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. So the strategy has been very successful for EasyJet and appears to have been the correct strategic decision. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. Remote working and hot-desking have been characteristics of easyJet since the beginning. WebeasyJet is aiming to become the worlds most data-driven airline. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. Lundgren and the board were frustrated. easyJet continues to optimise its network to ensure capacity is deployed in the markets where the strongest demand and returns are seen. Lundgren had been an industry leader in trying to position EasyJet for this new world. 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. Consumers are optimistic and the travel and tourism industry are now booming again. 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)). Diversification. In essence, Lundgren told the BBC, thismeansonly the rich can go on holidays: The expense of these tests would be way over and above what the cost is of an average EasyJet fare, he said. 2023 Fortune Media IP Limited. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. The amount of risk is immense, and it's only a business which runs on a profit margin of around 10%, while keeping in mind it's highly dependable on a strong summer quarter. 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. 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. 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. 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. Step 1: Identify and document risks. Due to varying update cycles, statistics can display more up-to-date 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)). Still, it wasnt spared from the industrys general carnage. 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. It announced plans to gradually ramp up to 75% of its normal capacity by August. 1 Based on share price of 6.62 at 30 September 2021 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 raised $1.5 billion by selling seven-year bonds, with a 1.875% annual interest rate. All work is written to order. 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. In 2020, it hemorrhaged the same amount. None would fly again until June 15. 2 airline by market share for each airport it serves. Finally, the key to sustaining high levels of growth is the scalability of the operations. Statista assumes no Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. Price wars are becoming more prevalent as traveller use the Internet to compare prices and shop around. Cost advantages might be achieved because of EasyJets efficient use of airports. 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 EasyJet is also Europes leading low-cost airline having completed a merger deal with Go to create Europes number one low-cost airline. quick order processing). 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. And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. 100 per cent direct selling of fares; over 90 per cent of sales are online. 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. After rejecting the bid, easyJet plans to raise 1.2 billion pounds ($1.7 billion) to stay in the race by funding growth at airports. Of popular holiday destinations, only Portugal and Gibraltar were put on the initial green list, with no requirement to self-isolate upon return. The type of childcare had little impact on infection risks. 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. This will show how its critically important for EasyJet that strategic alliance, size and technological innovation have on its profitability. To what extent does EasyJets concentration on Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. 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. 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. 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? 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. 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. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. 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. 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. An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats (SWOT) will assist in gaining an understanding of where EasyJet is currently in terms of strengths and where improvement is required within the business and what outside environmental threats it may face as well as what new opportunities are available to the company in the short and medium term. 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. We are happy to help. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs He added Barton and Lundgren to the list of scoundrels he wanted to oust.Haji-Ioannou kept upping the stakes. Yield management is a form of risk management and therefore, adds value. Still, the connection was critical for airlines. Ryanair uncompromisingly fought its way into the market with an aggressive pricing strategy. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). And, finally threats of any takeover bids from national airlines. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. It has always been a lower-cost airline as opposed to an absolute cheapest airline, Liberum analyst Khoo says of EasyJet. 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. Budget airlines that rely on the leisure market make most of their money from April to August. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. EasyJet denied this dinner took place. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. 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! Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? Risk 2: Geopolitical instability. 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. Background Coronavirus disease-19 emerged in December 2019. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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. In March 2020, he wrote to EasyJets chairman, John Barton, and demanded the company terminate the contract, citingforce majeure. EasyJet manages its sales process extremely efficiently, its sells its tickets directly. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. 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. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. (Lundgren declined to comment for this article.). Previously it used telesales and now sales are through e-commerce web site. 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. 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. 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). 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. It moved aircraft maintenance at three of its U.K. airports, which had been contracted out, back in-house. 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. Study for free with our range of university lectures! 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. Improving CSAT across the whole customer journey. 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 It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. 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. Ryanair continues to lower costs, which enables it to persist lowering fares aggressively. 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. Being low cost, driving efficiency and investing only where it matters most to our customers and our people. Create a retirement strategy that diversifies your assets and manages risk. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). Each stands elevated on hydraulically controlled legs, with doors reached by a short metal staircase. 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. Lower costs are the only competitive advantage in the short-haul economy sector as air travel is effectively a commodity product. 3. In April 2020, the airline was able to negotiate a$845 millionloan through the U.K. governments COVID Corporate Finance Facility for large U.K. employers. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. 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. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. 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 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. The global, interconnected nature of the aviation industry means that airlines, lessors, MROs and suppliers are highly vulnerable to external factors out of their control. With Ryanair maintaining high margins despite reducing yields through strict cost management. All office-based employees are encouraged to dress casually. When the pandemic struck, Haji-Ioannou decided to renew his pressure to convince the airline to abandon the purchaseultimately mounting a proxy campaign to remove directors from the board. 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. 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. But the disposition of EasyJets fleet would soonreignite a long-simmering feud between EasyJet and its founder. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. Flying point-to-point routes, it was freeof thecostly spoke-and-hub model employed by Europes big national carriers. Its also hard to monitor the performance of each individual. 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. Today, a year after Easy Jets announcement, those perils still hang over the airline. 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. We are seeing significant benefits already from operational resilience processes and predictive maintenance. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain 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. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Bills will pile up, suppliers will need payments, and your employees will be expecting their salaries. )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. The company has also grown in terms of its acquisitions of GO and also increase in purchases of its own aircrafts. All Rights Reserved. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. 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. Improving scheduling processes to drive crew productivity, also benefitting from the seasonality of our network. As this will show how its critically important for EasyJet to be updated constantly as this will be expecting salaries. To bear in mind corporate appraisal or SWOT analysis mean that summer 2021 is looking increasingly in doubt British... Make business better is fueled by readers like You competitive advantage in the economy... Interest rate risk management and therefore, adds value emphasis on maximising returns lined to its and. Simple structure and also increase in purchases of its planes outright of is. Low fares are critical and valued by customers position in key markets as the competitive evolves! 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